Watch collectors might want to skip the Rolex boutique and head straight for the pawn shop this year.
That is, if the Trump administration’s new 39% tariff on goods from Switzerland sticks.
The White House released updated tariff plans on Thursday, raising the rate from the proposed 31% announced earlier this year.
The tariff escalation caught the watch community off guard. Switzerland is a manufacturing hub for luxury watches like Rolex and Cartier.
Eugene Tutunikov, CEO of watch marketplace Swiss Watch Expo, told Business Insider the announcement “was a complete shock” and that “its effects will be immediate.”
Leading brands, including Rolex, have already raised prices in the US this year, likely in response to tariffs, Morgan Stanley analysts wrote in a July report about the Swiss watch market.
US imports of Swiss goods have faced a 10% baseline tariff since April.
A new 39% tariff on Swiss imports to the US would put more pressure on luxury watchmakers. That could lead to higher prices on Swiss-made goods shipped to the US, or less inventory for American shoppers.
While the Swiss government could still try to negotiate, the tariff is currently set to take effect on August 7. Collectors and watchmakers may soon have to reckon with this new reality.
Joshua Ganjei, CEO of watch marketplace European Watch Company, thinks more shoppers will turn to pre-owned models of high-end watches like Rolexes over brand-new ones. After all, a secondhand watch from a US-based seller won’t face the added cost of a new Swiss-made model shipped from overseas.
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“For many American collectors, the 39% tariff instantly turned new releases from Swiss brands into a luxury few can justify,” Ganjei said.
According to the Morgan Stanley report, pre-owned watch dealers have reported an increase in demand this year since Swiss-made brands began raising their prices in the US. Prices in the secondhand market have been falling since mid-2022, though the rate of decline has narrowed.
Pre-owned watches could also get more expensive, though. While the inventory already in the US won’t face tariffs, heightened demand could drive up prices on the secondary market as well.
Tutunikov said he thinks the pre-owned market will react to higher tariffs “much faster” than large retailers and hike prices sooner.
He expects prices on the secondary market to jump as much as 10% in the next month and potentially reach up to 35% in the next six months, “as demand overwhelmingly shifts to available inventory.”
“This isn’t just a tax; it’s a seismic event that will cause a stark divergence between the new and pre-owned markets,” Tutunikov said.
