Luxury Watchmakers as a Hedge: Navigating Trade Policy Shifts in 2025

The global luxury watch market has long been a barometer for economic confidence, but the seismic trade policy shifts of 2025 have tested its mettle in unprecedented ways. As U.S. tariffs on Swiss, Japanese, and German luxury watches surged to 31–39% in late 2024 and early 2025, the industry faced a dual challenge: absorbing immediate cost shocks while maintaining its allure to high-net-worth collectors. Yet, as data from Fortune Business Insights reveals, the market's resilience has defied expectations, with the sector expanding to a valuation of USD 53.69 billion in 2024 and projected to reach USD 134.53 billion by 2032 at a 12.23% CAGR. This growth, even amid trade turbulence, underscores the unique position of high-end watchmakers as a hedge against macroeconomic uncertainty.

Tariff Shocks and Immediate Market Volatility

The imposition of 39% U.S. tariffs on Swiss luxury watches in August 2025 triggered a wave of panic in the secondary market. Sellers initially overreacted by hiking prices, only to face buyer resistance, leading to sharp corrections in median asking prices, according to an Everywatch analysis. However, this volatility masked a deeper truth: the inelastic demand for luxury timepieces. Top-tier brands like Patek Philippe and Rolex saw sales spikes as collectors rushed to secure purchases before the tariff deadline, while mid-tier brands like Omega and Cartier maintained stability, as Everywatch reports. This behavior mirrors historical patterns where luxury goods act as "safe-haven assets," a dynamic McKinsey's 2025 report attributes to their perceived value as both status symbols and collectibles.

The price shock also created artificial scarcity, fueling a "fear of missing out" (FOMO) among collectors. For instance, a pre-owned Breguet Type XX's landed cost jumped from $7,033.73 to $9,203.73 due to tariffs, according to a Grand View Research report. While ultra-wealthy buyers absorbed these increases, analysts warn, according to Grand View Research, that aspirational buyers-critical to long-term market growth-may be priced out. This dichotomy highlights the sector's duality: it is both a resilient asset class and a market vulnerable to segmentation under sustained trade pressures.

Strategic Adaptation: Pre-Owned Markets and Digital Shifts

The Swiss watch industry's response to tariffs has been marked by agility. Deloitte's 2025 study notes a strategic pivot toward pre-owned markets, where demand surged as collectors sought to avoid tariff-affected primary purchases. This shift aligns with broader trends: Generation Z's growing interest in vintage-inspired designs and the rise of online retailing, which now accounts for a significant share of luxury watch sales, according to an InvestmentWatches outlook.

Digital platforms have further insulated the market from trade policy shocks. Online retailers and secondary market platforms like Chrono24 and WatchBox have enabled seamless cross-border transactions, mitigating the impact of localized tariffs. Grand View Research emphasizes that digital adoption has allowed brands to maintain pricing power even as physical retail channels struggle post-pandemic. For example, in-store sales in Switzerland now outpace online retail, but the latter remains a critical buffer against trade disruptions, according to the Deloitte study.

Long-Term Resilience and Investment Implications

While short-term volatility persists, the luxury watch market's structural strengths suggest long-term resilience. The renewed focus on craftsmanship-mechanical watches now dominate 60% of high-end sales-has created a product category resistant to commoditization, a trend Fortune Business Insights documents. Additionally, brands are leveraging sustainability and personalization to differentiate themselves. For instance, independent watchmakers are capitalizing on the artisanal appeal of limited-edition pieces, a trend McKinsey links to the sector's ability to "monetize heritage."

Investors should also consider the geopolitical landscape. The Deloitte study highlights that Swiss watchmakers, whose U.S. sales account for 17% of total exports, are exploring local production and duty-free zones to circumvent tariffs. These strategies, combined with the sector's low debt-to-equity ratios and high profit margins, position luxury watchmakers as a defensive play in an era of global economic fragmentation.

Conclusion

The 2025 trade policy shifts have exposed vulnerabilities in the luxury watch market but also reinforced its role as a hedge against uncertainty. While tariffs have disrupted pricing and sourcing, the sector's ability to adapt-through digital innovation, pre-owned markets, and brand-driven value propositions-ensures its continued appeal to collectors and investors alike. As the market navigates these challenges, high-end watchmakers remain a testament to the enduring power of craftsmanship and heritage in an unpredictable world.