The Resilience of the Swiss Watch Industry in a Tariff-Driven US Market

The Swiss watch industry, long a symbol of craftsmanship and prestige, faces a pivotal test in the form of a 39% U.S. import tariff imposed in 2024. This punitive measure has disrupted a market where the U.S. accounted for CHF 4.4 billion in Swiss watch exports in 2024-nearly 17% of global exports according to Deloitte's 2025 study. Yet, even as the tariff threatens to erode demand through price hikes, the industry's strategic agility and inherent defensive characteristics position it as a resilient growth sector insulated from broader macroeconomic pressures.

Tariff Impact and Immediate Response

The tariff's immediate effect was a sharp decline in export volumes, though pre-tariff stockpiling by brands and retailers cushioned the blow. Between January and August 2025, Swiss watch exports to the U.S. fell by just 1.0% year-on-year, a stark contrast to the anticipated collapse according to Deloitte's 2025 study. This short-term resilience underscores the industry's ability to absorb shocks through inventory management and pricing strategies. However, the long-term implications are more complex. With leading Swiss brands now charging significantly higher prices in the U.S., demand could wane in a market that accounts for a quarter of global luxury watch sales according to Deloitte's 2025 study.

Long-Term Resilience: Diversification and Innovation

To counteract the U.S. headwinds, the Swiss watch industry has pivoted to high-growth regions like India and Mexico. These markets, less sensitive to global economic cycles, have shown robust demand. For instance, 62% of Mexican consumers plan to purchase traditional watches in the next year, while 69% are eyeing smartwatches according to Luxury Daily. This geographic diversification mirrors the defensive strategies of other luxury sectors, which prioritize emerging markets to offset declines in mature economies.

Innovation also plays a critical role. Brands are leveraging limited editions and radical design innovations-such as Trilobe's rotating-dial watches-to maintain exclusivity and attract price-insensitive buyers according to Forbes. Meanwhile, experiential marketing, like Tag Heuer's alignment with Formula 1, reinforces emotional connections during uncertain times according to Forbes. These tactics align with broader luxury retail trends, where 72% of consumers still plan to buy traditional watches despite declining ownership rates according to Luxury Tribune.

Defensive Characteristics in Economic Downturns

The Swiss watch industry's resilience is further bolstered by its defensive traits. Unlike cyclical sectors, luxury retail thrives on brand loyalty and self-reward motivations. Deloitte's 2025 study reveals that 58% of buyers are unwilling to spend more than 1,500 Swiss francs on a traditional watch, yet 72% of respondents plan to make a purchase within 12 months according to Luxury Tribune. This suggests that while price sensitivity has risen, demand remains anchored by emotional and aspirational drivers.

Moreover, the pre-owned market is emerging as a key buffer. With 40% of millennials and Gen Z consumers likely to buy pre-owned watches in the coming year, brands are adapting by enhancing authentication and digital engagement according to Luxury Tribune. This shift reflects the luxury sector's broader pivot toward sustainability and value retention, traits that insulate it from economic volatility.

Conclusion: A Defensive Growth Sector in Action

While the U.S. tariff poses a near-term challenge, the Swiss watch industry's strategic diversification, innovation, and emotional resonance with consumers position it as a defensive growth sector. Unlike other industries vulnerable to macroeconomic swings, luxury retail leverages brand loyalty, exclusivity, and experiential value to maintain demand. As global markets remain turbulent, the Swiss watch industry's ability to adapt-through geographic expansion, digital innovation, and emotional storytelling-ensures its continued relevance and profitability.

For investors, this resilience underscores the sector's potential as a hedge against economic uncertainty. The Swiss watch industry is not merely surviving the tariff-driven storm; it is redefining its value proposition to thrive in a post-pandemic world.