he watch industry has been dogged these past months by cyclical and, in some cases, structural challenges, culminating, as brands and retailers gathered at Watches and Wonders, in Donald Trump’s announcement of a 31% tariff on imports from Switzerland (versus 20% for the European Union and 10% for the United Kingdom). The US market has been instrumental in maintaining post-Covid sales of Swiss watches at a high, compensating the lacklustre performance of the industry’s previous eldorado, China.

The surprise announcement came ten years, almost to the day, after another. On January 15, 2015, with the SIHH about to open its doors, Switzerland’s central bank removed the currency exchange cap on the franc, provoking what Nick Hayek described as a “tsunami”. The ensuing move upmarket, towards Haute Horlogerie, resulted in record years in value terms at least: volume sales were captured in part by another phenomenon, smartwatches.

Are the US trade barriers on the same scale as the previous decade’s currency tsunami? They could not have come at a worse time (supposing there is ever a right time!), as companies in the supply chain introduce reduced working hours in an attempt to ride out the current slowdown. How long this cycle will last, no-one knows.

Exactly ten years ago, the Swiss National Bank’s decision to remove the currency ceiling shook attendees at the watch industry’s annual trade gathering in Geneva. Europa Star analysed the repercussions in a special report. Now it seems history is repeating itself.

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If these levies remain in place “only” for the months it would take to negotiate an agreement, they could resolve the problem of overstock (endemic to the watch industry) in this key market. Already, a number of brands have shipped additional inventory to the United States prior to the introduction of the new import tariffs. The number of Americans travelling to watch hubs outside the US might also increase.

“Ultimately, the US consumer will bear the cost,” a captain of industry and observer of the watch market told me. “Only they can decide whether or not this policy will be reversed, because they’re the ones who vote. No-one can say Donald Trump didn’t make his intentions clear in his campaign programme.”

Another executive, this time from a small Haute Horlogerie brand, said its strategy, when competing with the majors, was to propose maximum value in its segment and that margins were not infinitely flexible. He also commented that “some retailers have already had their margins considerably reduced in negotiations these past years while others still have some room to manoeuvre.”

Given Switzerland’s ultra-dominance, particularly in Haute Horlogerie, the general shift towards the higher end of the market, and a clientele perceived as less price sensitive, is likely to continue. Equally likely is the significant impact the tariffs will have on brands that rely heavily on competitive pricing.

How prevalent are they? While not indicative of the industry’s general direction, efforts are being made by certain brands to propose more accessibly priced watches for middle-class customers, as opposed to an elite, and it would be regrettable if these efforts were thwarted. The current situation is an acute reminder that the industry needs volume in order to maintain a healthy ecosystem, from the first component to the final sale.