Luxury Watch Industry Faces Mounting Uncertainty Amid Mideast Conflict
The annual luxury watch fair "Watches and Wonders" opens this week in Geneva, but the escalating war in the Persian Gulf has cast a shadow over an industry striving to rebound from two years of market contraction and tariff turmoil. The event, a premier gathering for high-end timepiece makers, unfolds against a backdrop of renewed economic pressures and logistical disruptions stemming from the U.S. and Israeli military engagement with Iran that began on February 28.
Economic Ripples from the Conflict
The conflict has had sweeping global economic impacts, driving up energy prices, stalling fertilizer shipments, and disrupting air travel. The luxury watch sector, which generates tens of billions in annual revenue, has not been spared. Soaring prices for precious metals like gold and silver over the past year, coupled with U.S. President Donald Trump's Liberation Day tariffs—though reduced from peak levels—had already strained the market. Now, renewed inflation pressures and wavering consumer confidence are injecting fresh uncertainty.
Philippe Pegoraro, chief economist at FH, the Federation of the Swiss Watch Industry, noted that official export figures for March are pending but anticipates a sharp decline. "At this point, we're expecting a sharp drop," he said, citing logistical issues and sagging demand. While purchases from residents in the United Arab Emirates remain steady, tourist traffic—a key driver of sales in hubs like Dubai airport—has suffered due to Iranian strikes. "Rebuilding confidence is going to take some time," Pegoraro added.
A Cloud Over the Geneva Fair
The "Watches and Wonders" fair is a rarefied event showcasing innovations and facilitating deals, with about 65 exhibiting brands from worldwide—a small fraction of Switzerland's 450 watchmakers. Approximately 60,000 visitors are expected. However, industry analyst Ming Liu highlighted the persistent uncertainty. "When you look back a year ago, the sort of theme was: The tariffs and the uncertainty. Unfortunately, we aren’t anywhere closer to certainty, probably even less with what’s happening in the Middle East," she said. "That’s obviously going to have a cloud over Watches and Wonders. But it has a cloud over everything, right?"
According to Morgan Stanley's 9th Annual Swiss Watcher report, compiled with LuxeConsult, Swiss watch exports declined 1.7% in value last year, marking a second consecutive year of market contraction. This occurred despite a relatively strong Swiss franc against the U.S. dollar and euro. The report also noted a trend toward consolidation, with four brands—Rolex, Cartier, Patek Philippe, and Omega—accounting for over half of Switzerland's retail market share. Meanwhile, the upper-end segment is growing: hand-crafted watches priced above 50,000 francs (over $63,000) comprised 37% of Swiss watch export value last year, up from 33.5% in 2024.
Switzerland's Dominance and Challenges
Swiss-made watches represent about 96% of the global luxury watch market, defined as those retailing for at least 2,000 francs (over $2,200). The Morgan Stanley report identifies Japan's Grand Seiko as the "most credible non-Swiss challenger," with India's Titan also making a push into the top tier. However, Switzerland has faced a turbulent year, including exceptionally high U.S. tariffs that peaked at 39%—the highest imposed on any developed Western country. In November, a delegation of Swiss business executives visited the White House, presenting gifts such as a Rolex clock to President Trump, leading to a deal the following month that significantly lowered U.S. tariffs on Swiss products.
As the industry gathers in Geneva, the focus remains on navigating these compounded challenges, from geopolitical strife to economic volatility, in a market where bling is back but the outlook remains tarnished.
