Trump’s 39% Tariffs Reshape Global Luxury Watch Landscape

According to CNBC, Swiss watch exports to the United States plunged 56% in recent months as the industry anticipates potential 39% tariffs under a Trump administration. Breitling CEO Georges Kern described the proposed tariffs as “horrible” for Switzerland, noting that the U.S. market has been particularly challenging despite his overall bullish outlook. The luxury sector faces a “very long-lasting crisis” driven by post-pandemic slump, inflation, and Chinese economic slowdown, though Kern reported surprising 4-5% revenue growth in China recently. Bernstein’s Luca Solca cautioned that luxury watches “will be under pressure for a while” due to the post-COVID purchasing boom of 2021-2023, while Kern highlighted booming markets in the Middle East, South America, and Southeast Asia as bright spots. This geographic rebalancing represents a fundamental shift in luxury consumption patterns.

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The Tariff Mechanics Behind the Market Shift

The proposed 39% tariffs would represent one of the most significant trade barriers for luxury goods in decades, fundamentally altering the economics of Swiss watch exports. Unlike typical tariff structures that target specific industries for strategic reasons, these broad-based luxury tariffs would create immediate price inflation for American consumers while forcing Swiss manufacturers to either absorb costs or lose market share. The 56% export decline suggests manufacturers are already adjusting their supply chains and inventory strategies in anticipation, potentially redirecting premium timepieces to markets with more favorable trade conditions. This preemptive market adjustment reveals how deeply integrated global luxury supply chains have become and how quickly they can reconfigure in response to political signals.

The Unexpected Rise of Secondary Markets

While the U.S. market contracts, the growth in Southeast Asia, Latin America, and the Middle East represents a strategic diversification that many luxury brands have been pursuing for years. What’s particularly noteworthy is how quickly these secondary markets are maturing. The demographic advantages in countries like Indonesia, Malaysia, and the Philippines include younger populations with growing disposable income and less exposure to the post-COVID purchasing saturation that’s affecting Western markets. For Breitling and similar brands, this geographic shift isn’t just about avoiding tariffs—it’s about tapping into the next generation of luxury consumers who are just entering their prime spending years and haven’t yet experienced the watch-buying fatigue seen in mature markets.

China’s U-Shaped Recovery Pattern

The Chinese market presents a fascinating case study in luxury resilience. The characterization of China’s recovery as “U-shaped” by Bernstein analysts suggests a gradual bottoming-out rather than the V-shaped rebound many hoped for. This pattern indicates fundamental changes in Chinese consumer behavior that may persist beyond temporary economic cycles. The fact that China represents only 4-5% of Breitling’s revenue yet shows surprising growth suggests either market share gains from competitors or successful penetration into previously untapped Chinese consumer segments. Either scenario indicates that recovery patterns will be uneven across brands, with those having stronger brand recognition and distribution in emerging markets likely to outperform.

The CEO’s Balancing Act in Turbulent Times

Georges Kern’s leadership approach reveals the delicate balance required of luxury CEOs during market transitions. His simultaneous acknowledgment of sector-wide challenges while maintaining bullish long-term optimism reflects the narrative management essential for preserving brand prestige and investor confidence. What’s particularly telling is how Kern differentiates between cyclical challenges and structural opportunities, emphasizing luxury’s enduring emotional appeal while acknowledging specific market pressures. This dual perspective suggests that successful luxury leadership in the coming years will require navigating short-term volatility without compromising the long-term brand narrative that underpins luxury valuation.

Broader Industry Implications Beyond Watches

The luxury watch sector’s experience provides a template for what other luxury categories may face. The 39% tariff threat, combined with the post-COVID purchasing boom hangover, creates a perfect storm that could similarly impact handbags, jewelry, and high-end apparel. The geographic rebalancing we’re witnessing in watches likely foreshadows similar shifts across the luxury landscape, with brands that have diversified manufacturing and distribution networks gaining competitive advantage. The Middle East’s characterization as a “booming environment” post-Gaza ceasefire suggests that geopolitical stability remains a crucial factor in luxury market performance, potentially making emerging markets both higher-growth and higher-risk propositions for luxury brands navigating an increasingly complex global landscape.