War intensifies uncertainty for makers of the ultimate in bling, luxury watches

The U.S. and Israeli war against Iran that began Feb. 28, however, has had a sweeping impact on the global economy, driving up energy prices, stalling shipments of fertilizer and disrupting air travel, among other things.

High-end watches have not been spared. Soaring prices for precious metals like gold and silver over the last year and U.S. President Donald Trump's Liberation Day tariffs launched a year ago — while down from peak levels — already affected the market.

Now, renewed inflation pressures and doubts about consumer confidence are injecting new uncertainty into the market that generates tens of billions of dollars in revenue each year.

“The war in the Middle East will have certainly a huge impact for the Swiss exports because it represents 10% of the total Swiss watch exports, so it’s quite substantial," said Oliver Müller, founder of Swiss consultancy LuxeConsult.

"Some markets in the Middle East are totally halted," he said. In the United Arab Emirates, for example, "60% of business is done with tourists. You can imagine that nothing is going on currently.”

A ‘cloud’ over Watches and Wonders show

The show is an elite gathering that showcases innovations, drums up deals and hosts some 65 exhibiting brands from around the world: That's just a sliver of an industry that counts some 450 watchmakers in Switzerland alone. About 60,000 visitors are expected to attend.

Morgan Stanley, in the 9th Annual Swiss Watcher report put together with LuxeConsult, said in February that Swiss watch exports declined 1.7% last year in value terms — a year when Switzerland's franc was relatively strong compared with the U.S. dollar and the euro.

It was a second straight year of market contraction, the report said.

“When you look back at a year ago, the sort of theme was: The tariffs and the uncertainty," said industry analyst Ming Liu. “Unfortunately, we aren’t anywhere closer to certainty, probably even less with what’s happening in the Middle East."

“That’s obviously going to have a cloud over Watches and Wonders,” she said. ”But it has a cloud over everything, right?"

Similar to the luxury goods sector as a whole, the biggest brands have been gaining market share. Four of Switzerland's 450-odd watch brands — Rolex, Cartier, Patek Philippe and Omega — make up over half the total Swiss retail market share, the report said.

And the upper-end segment has been growing: hand-crafted watches priced at more than 50,000 francs (more than $63,000) apiece made up 37% of the total value of Swiss watch exports last year — up from 33.5% in 2024, it said.

Switzerland still stands out in the luxury watch business

The Morgan Stanley report said Swiss-made watches represent about 96% percent of the global luxury watch market, or those that retail for at least 2,000 francs each (more than $2,200).

Japan's Grand Seiko is the “most credible non-Swiss challenger” and India's Titan is making a run at the top tier, the report said.

The Swiss are coming off a turbulent year. Trump imposed exceptionally high U.S. tariffs on goods from Switzerland last year, hitting a peak of 39% — the highest faced by any developed Western country.

A delegation of Swiss business executives traveled to the White House and offered Trump gifts, including a Rolex clock, in November. The following month a deal was announced that sharply lowered U.S. tariffs on Swiss products.