arly in November, the United States held an election and candidate Donald Trump won the Presidency by approximately 3 million votes. It took eight years, but the American political pendulum swung back to where it was in 2016. Although Trump’s 2024 win was more definitive than his 2016 victory, it remains to be seen if Trump will manage to implement unaltered versions of his campaign promises. There are early signs of difficulty. For example, his preferred pick for Attorney General, Matt Gaetz, withdrew from consideration after meeting resistance from members of Trump’s own party.

Nonetheless, a wide swath of industry leaders are likely attempting to divine what the future holds as a consequence of Trump’s political resurrection. Enterprises operating internationally are the most likely to experience disruption given Trump’s promise to more or less eliminate the trade liberalization policies of the 1990s and 2000s and return the United States to its more protectionist, mercantilist traditions. The watch industry is almost certainly one of those business categories with potentially significant exposure to Trump’s disruptive plans for international commerce. So, what could the future hold?

Another US President, Truman, famously asked for a one-armed economist because he was tired of hearing “on the one hand” followed by “on the other …” when it came to economic matters. Fortunately or unfortunately, I will follow in this tradition when it comes to assessing the impact of Trumponomics 2.0 on the watch industry. In what follows, I will detail “headwinds,” that is, things Trump might do that could endanger the watch industry. I will also detail “tailwinds” which are the Trumpian policies which might benefit the watch industry. I will close my discussion with an assessment of the balance of risks.

Headwinds

One of Trump’s favored acolytes is billionaire Elon Musk. It is sometimes difficult to know if Musk’s statements can be trusted. After all, for eight years, it appears Musk promised self-driving cars but did not deliver on those promises. Nevertheless, if we take Musk at his word, there are plans for Trump to slash federal spending and, more or less intentionally, create “economic hardship” in the United States.

The bottom line here is that economic hardship is not good for business, generally speaking. My interpretation of Musk’s statement is that there will be a planned recession sometime soon in the United States. Indeed, one of the most reliable economic predictors of recession (the slope of the yield curve) has been flashing warning signs about a downturn in the United States for a good while now. And, as some have said, when the US economy sneezes, the rest of the world catches a cold.

It is true that the COVID recession coincided with improved fortunes in the watch industry. We should not forget, though, that momentum at the start of that downturn was very different. For example, secondary market price indices show that luxury watch prices were rising before COVID hit. We had a very different backdrop in 2024 and heading into 2025. Currently, the watch market shows declining secondary market prices and flagging demand. If you were going to choose a time when the watch industry might face widespread recessionary uncertainty and joblessness, that time would not be now.

Adding to this particular headwind is Trump’s plan to place tariffs on a wide array of imports, leaving almost no industry untouched. If this policy unfolds, watch producers outside the United States will find it more difficult to sell in one of the more important markets in the world. While price certainly plays a more complicated role in luxury markets, pass-through of tariff costs in US watch boutiques will make Swiss and Japanese timepieces comparatively more expensive. Watch buyer dollars may well flow elsewhere.

Equally concerning is the possibility that various trade wars will begin, in which US trading partners place matching tariffs on products exported by the US. History is replete with these “tit for tat” downward spirals when it comes to trade barriers. A trade war would worsen any slowdown in the US economy and potentially further erode spending on watches.

Let’s next turn to some developments which could harken well for the watch industry.

Tailwinds

Evidence from the first Trump trade war suggests that the dollar appreciated in response. While a dollar appreciation is not necessarily a guarantee this time around (particularly since the Federal Reserve is presently easing), such appreciation would make it easier for US collectors to pick up watches produced abroad. A strengthening dollar could counteract some of the adverse effects described above.

Further, we’ve had enough time to assess the impact of Trump’s tax cuts in 2017. Those cuts disproportionately benefited the most affluent households in the United States. Increasingly, watch brands rely upon sales to such households. They’re the ones who can afford to spend high four- or even five-figure prices for a timepiece. One of the safest bets is that Trump will cement his prior round of tax cuts, and perhaps he will even increase those cuts. The watch industry would likely benefit from this development.

Somewhat relatedly, there is an open question regarding the role of cryptocurrency appreciation in bolstering watch sales internationally. There is certainly a correlation between secondary market watch prices and the rapid increase in the price of Bitcoin, for example, in 2020 and 2021.

However, secondary market prices began their downturn during a period of relative stability in the price of Bitcoin. From my perspective, it isn’t clear that crypto markets were the main cause of the rapid increase in watch prices. Nevertheless, Bitcoin has shown another remarkable run-up since Trump’s win and there are many “crypto friendly” personalities in Trump’s orbit. For this reason, crypto market developments may support additional spending on luxury watches.

Finally, Trump’s energy policy will likely bolster the oil industry around the world. As I documented in my book on the history of Rolex advertising, regions specializing in the production of oil typically exhibit robust demand for luxury watches. Thus, Trump’s almost inevitable pivot towards oil would very likely have beneficial knock-on effects for watch sales.

Wrapping Up

In summary, it is very difficult to determine if watch industry headwinds or tailwinds will prevail under Trumponomics 2.0. My assessment is that a US recession coupled with a widespread trade war would result in very dire circumstances for watch sales. Heading into 2025, there are many sources of significant uncertainty, such as the conflicts in Ukraine and the Middle East. I believe there are real risks that Trumponomics 2.0 would only add to this uncertainty and contribute to a pullback in spending of all sorts. Nevertheless, the stars may well align and uncertainty may diminish. Though I believe this is unlikely, if Trumponomics 2.0 manages to pull off rising economic fortunes, we would see a return to more robust spending by watch collectors and enthusiasts. Only time will tell.