After failing to come to an agreement, the White House has officially imposed a 39% tariff on Swiss exported goods, excluding pharmaceuticals, August 7th.
This new shift is set to majorly disrupt the market, raising new Swiss watch prices significantly in the US. Not only will retail prices skyrocket (anywhere from 12-14%), but this tariff has the potential to limit availability of new stock, should brands choose to divert inventory to other countries.
This 39% tariff is crippling for many Swiss brands, especially smaller independent brands that cannot absorb the new costs.
It is to be expected that new stock of Swiss made watches in the coming months could sharply decline. Even larger brands may still choose to suppress the volume of new watches in the US. Margins could simply be too high for buyers, leading to far fewer units of stock.
However, trade volume on the secondary market is already on the rise.
After this announcement, resellers like us at WatchGuys have already seen a spike in sales. Collectors are definitely looking to get ahead of the market before premiums hit. Though old inventory is not affected by the tariff price increase quite yet, sought-after models will still see a major rise in prices on the secondary market due to demand.
According to experts at Business Insider, pre-owned prices are expected to go up over 10% in the next month, potentially climbing up to 35% in the next 6 months.
Watch collectors may also choose to trade abroad. There may emerge an interest in international trading in the European market, where there is no 39% tariff disrupting the market.
Time will tell if the 39% tariff is permanent or will decrease. However, it is unlikely that, even if the tariffs decline, any luxury watch maker will return to pre-tariff pricing.
The watch secondary market has been resilient, and we expect that true watch enthusiasts will continue to trade regardless of climbing prices.
Leave a comment