Swiss watchmakers are waking up to a new world in which exports to its biggest market, and engine of all growth over the past two years, will be hit with a punitive new 39% tariff, an immediate 29% increase that hit shipments to the United States that were not already in transit last night.
There are no pain-free options for the country’s mighty watch brands, merely a choice on how to spread the additional cost in a way that doesn’t derail a recovery in the global watch market that began 6-9 months ago.
WatchPro took a snapshot of prices for watches from Rolex, Patek Philippe, Omega, Cartier, Breitling, IWC and Blancpain on Watches of Switzerland’s USA ecommerce site at the beginning of this week and re-checked those prices this morning.
There were no price changes for any of the watches we are tracking.
Avoiding a kneejerk reaction with price rises may have been made easier in the United States because there has been significant increase in the level of stock shipped to the country in the first six months of the year.
A comparison between exports in the first six months of 2024 and 2025 shows goods worth an additional CHF 600 million of stock entering the United States, which amounts to around two months’ supply that has been tariffed at the global 10% rate or even the 1-2% rate charged before that rate was imposed in April.
On the ground, it is more likely to one month’s worth of additional inventory because watches from the biggest selling brands would have sold through quickly in the first half of the year, although there is likely to have been another spike in exports over the past week.
Faced with these circumstances, the question on everybody’s lips is what to do next?
I tried to make sense of the options in Corder’s Column yesterday, but thought I would try a far more qualified observer with every possible data source on the internet at its fingertips: Google’s new AI assistant.
“What would you do if you were a Swiss watch brand that now has to pay an additional 29% tariff on all goods entering the United States?” WatchPro asked the new digital assistant.
Here is what it replied:
Facing a significant increase in tariffs on goods entering the United States, a Swiss luxury watch brand would likely employ a multi-pronged strategy to minimize impact and maintain market position. Here’s what a brand might do:
1. Recalibrate pricing
- Absorb a portion, pass on the rest: Brands are unlikely to fully absorb a 29% tariff hike, but passing it all onto consumers could significantly deter sales, especially in the mid-range segment. A probable scenario involves sharing the cost burden across various layers of the supply chain (manufacturer, distributor, retailer) and increasing retail prices in the US by a more manageable amount, possibly in the range of 12-14%.
- Maintain global parity (or near parity): Brands will likely try to limit the price differential between the US and other major markets. This might mean spreading the tariff burden globally through smaller, more gradual price adjustments across all markets, rather than a steep increase solely in the US.
- Strategic discounting and promotions: To offset potential decreases in demand due to price increases, brands might consider targeted promotions or exclusive collections, according to powercommerce.com.
2. Optimize logistics and operations
- Diversify supply chains: Reducing reliance on single-source suppliers and exploring production facilities outside Switzerland or tariff-friendly regions like Turkey or Morocco could offer more flexibility and potentially lower costs.
- Streamline operations: Focus on optimizing transportation routes, managing inventory more efficiently, and exploring technologies to reduce overall operational costs.
- Proactive shipping: Brands might have engaged in accelerated shipments to get watches into the US market before the tariff deadline, minimizing the initial impact of the higher rates.
3. Enhance brand value and customer loyalty
- Emphasize unique selling propositions: Reiterate the brand’s heritage, craftsmanship, exclusivity, and overall value to justify pricing and reinforce brand loyalty amongst existing customers.
- Focus on the customer experience: Invest in personalized shopping experiences, exclusive events, and loyalty programs to build strong emotional connections and mitigate the impact of price increases on consumers.
- Explore the pre-owned market: Leverage the rise of the pre-owned market by participating in or partnering with platforms that offer certified pre-owned watches, catering to a potentially more budget-conscious consumer segment and bypassing the tariffs on new goods.
4. Engage in advocacy and diplomacy
- Lobbying efforts: Industry associations like the Federation of the Swiss Watch Industry (FH), alongside the Swiss government, are likely engaged in discussions with US authorities, advocating for a reduction or exemption from these tariffs.
- Exploring alternative trade agreements: Switzerland may seek to strengthen trade relations with other countries and pursue free trade agreements to diversify its export markets.
5. Adjust marketing and sales focus
- Shift attention to other markets: While the US remains the largest market for Swiss watches, brands might reallocate marketing efforts and resources to other key regions, especially those with more favorable trade agreements.
- Target specific consumer segments: Focus on high-net-worth individuals, who are likely less price-sensitive and prioritize exclusivity, according to 2luxury2.com.
Important Note: The ultimate success of these strategies depends heavily on factors such as brand strength, existing market share, pricing power, and the longevity of the tariff implementation. The situation remains fluid, with ongoing negotiations and potential for changes in trade policy, according to WatchPro.
These suggestions are certain to be on the table at every major Swiss watchmaker, but will the increased tariff impact all brands equally?
Back to Google AI and WatchPro asked a follow-up question:
“Should the response be the same for brands like Rolex, Audemars Piguet and Patek Philippe, which still have waiting lists in America for their watches? Or should all brands follow the same strategy?” we asked.
Again, the reply was measured and well-informed:
In facing the new tariff, luxury watch brands like Rolex, Audemars Piguet, and Patek Philippe (often characterized by high demand and waiting lists) will likely tailor their responses to leverage their unique market position, rather than following the same strategy as all other brands.
Here’s a look at how their strategies might differ:
1. Pricing
- Premium brands (Rolex, Audemars Piguet, Patek Philippe): Given their immense brand power, the high prices they command and the presence of waiting lists for popular models, these brands might be more inclined to pass on a larger portion of the tariff increase to consumers through retail price adjustments. This approach is supported by the relative inelasticity of demand for their products – collectors who have been on waiting lists for years may be less sensitive to a price hike than someone buying a more widely available watch.
- Other brands: Brands with lower price points or those facing more competition might be forced to absorb a larger share of the tariff cost themselves to remain competitive. This could lead to squeezed profit margins or even potential market exit for some smaller brands if the tariffs persist.
2. Supply chain and logistics
- Premium brands: Brands like Audemars Piguet that already operate with limited production and controlled distribution may face fewer difficulties adapting to the new tariff landscape. They may further restrict U.S. allocations or prioritize other markets with more favorable trade agreements to maintain brand desirability and exclusivity.
- Other brands: Brands with more diverse production capacities outside Switzerland might explore shifting some assembly operations to other tariff-friendly regions, though this takes considerable time and investment, according to bobswatches.com.
3. Secondary market
- All brands: The tariff will undoubtedly increase the importance of the pre-owned market for all Swiss watches, according to Bob’s Watches.
- Premium brands: The already high demand and waitlists for Rolex, Patek Philippe, and Audemars Piguet are likely to be further amplified, leading to potentially increased premiums on the pre-owned market. This could present new opportunities for brands to engage with the pre-owned market directly, potentially through certified pre-owned programs.
4. Brand messaging
- All brands: Emphasizing Swiss quality, craftsmanship, and heritage will become even more crucial for all brands, differentiating them in a market with increased competition and potentially higher prices, notes consumersexec.com.
- Premium brands: The message will likely reinforce the idea of these watches as appreciating assets, justifying price increases and the investment involved in owning such coveted pieces.
In conclusion, while all Swiss watch brands will be impacted by the tariff increase, the strategies they employ to mitigate its effects will differ depending on their market position, pricing power, and brand image. Premium brands like Rolex, Audemars Piguet, and Patek Philippe are likely to have greater flexibility to adjust pricing and potentially capitalize on the increased desirability of their limited production, even in the face of higher tariffs.
Finally, WatchPro thought it would ask the public what it would do facing the same set of circumstances as Swiss watchmakers today. A snap poll on LinkedIn delivered a mixed result from a small sample of 126 votes, but favoured hitting businesses and consumers in the United States by increasing prices by around 10% or more.
