Tariff imposed and Watch Prices in the USA

[Dhiren]

Interesting developments

The U.S. government’s recent decision to impose a 31% tariff on Swiss imports, including watches, is poised to significantly impact both the U.S. market and global watch availability. 

Impact on U.S. Watch Prices and the Grey Market:
•Increased Retail Prices: Importers and retailers may pass the tariff costs onto consumers, leading to higher prices for Swiss watches in the U.S. For instance, a $10,000 watch could see its price rise to $13,100, reflecting the added tariff burden. 
•Expansion of the Grey Market: Elevated retail prices might drive consumers toward the grey market, where watches are often sold at discounted rates. This shift could lead to an influx of Swiss watches in the grey market, potentially undermining official retail pricing and affecting authorized dealers’ sales. 

Effect on Global Availability of Sought-After Watches:
•Diversion of Supply: With the U.S. market becoming less accessible due to higher prices, excess inventory may be redirected to other regions, potentially saturating markets that were previously balanced.
•Price Fluctuations: An influx of watches into markets like India and Mexico, which have shown significant growth in Swiss watch imports, could lead to price adjustments. For example, India experienced a 25% increase in Swiss watch imports in 2024, indicating a trend that might be influenced by global supply shifts. 
•Impact on the Grey Market Worldwide: As official channels face higher prices, the global grey market for Swiss watches could expand, offering discounted prices but potentially affecting brand value perceptions and after-sales support.

In summary, the new U.S. tariff on Swiss watches is likely to lead to higher retail prices in the U.S., potentially boosting grey market activities. This shift could disrupt traditional pricing structures and affect the availability of sought-after watches across global markets.


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