Dani's Opinion: Tariffs and Their Impact on the Watch Market
Daniel PintoIs the 31% tariff on Swiss watches real or just political pressure? Daniel analyzes the impact on the watch industry and how it would affect collectors.
It only took the US president's announcement of his new tariff policy a little over a week ago for the world to panic. Stock market ups and downs, threats of reciprocal tariffs, and a new trade battle with China. But what really matters to us—or rather, what should matter to American consumers—is the 31% tariff Trump imposed on Swiss imports. There's a lot to cover, but we'll try to briefly address the main points from a purely theoretical perspective, because no one can predict with certainty what will happen today.
First, this is most likely a power play. There are unknown pieces moving behind the scenes that are driving the decisions of the president and his counterparts. The most important thing is to understand that this 31% tariff will probably never be implemented. Everything indicates that this is a maneuver to force a negotiation with Switzerland, which could end in zero tariffs or some compensatory measure. This is the most plausible scenario. But just in case, let's imagine a future where this 31% tariff on Swiss watches is actually applied.
Before panicking, it's important to understand that this percentage is calculated on the import value, not the final consumer price. If a watch costs $10,000 in a store, it was probably imported for $5,000. Therefore, the tariff would be around $1,600. If the importer passes on that entire cost, the watch would rise to $11,600. That's not insignificant, but it's not the end of the world either. Furthermore, we're coming off a weak 2024 for luxury: an uncertain economy, declining stock markets, and a dormant Chinese market. In this context, is anyone really in a position to raise prices without hurting their sales?
Probably not. What would most likely happen is that 31% would be divided between the brand, the distributor, and the store. Brands can't afford to suddenly raise prices and expect sales not to suffer (except perhaps Rolex and Patek). But there's something even more important: these are luxury goods. We don't buy them out of necessity, but out of emotion. And when our spirits are down, that emotional impulse to buy is also down. The hardest hit wouldn't be to our wallet, but to our state of mind. Because when uncertainty reigns, the celebration is postponed. And with it, the purchase of a watch.
That's why we believe that, beyond the numbers, it's the noise that complicates matters. The intangible. The tension. We don't believe Trump wants to replace Swiss imports with local production. It doesn't make sense or have a strategy. And perhaps for that very reason, we're confident this will pass. But if it doesn't, and if American collectors are affected by these tariffs, we'll be waiting for them here at LOFT. Without tariffs, without stress, with good watches and better conversations. Because when politics interferes with time, there's no better response than to continue enjoying watchmaking. Without guilt.
