Iran war creates more unease for makers of luxury watches

Starting Tuesday, Geneva will host Watches and Wonders, an annual luxury watch fair viewed by industry executives as a test of whether the sector can rebound after two years of contraction. But the backdrop for makers of high-end timepieces has become more uncertain as the U.S. and Israeli war against Iran—begun Feb. 28—has rippled through global economic conditions, including higher energy prices, disrupted air travel and disrupted shipments of fertilizer, the Associated Press reported.

The war has also made it harder for executives to plan around demand for luxury goods, with the AP report pointing to renewed inflation pressures and doubts about consumer confidence as additional variables for watchmakers. High-end watches, the report said, have also been affected by earlier market headwinds, including rising prices for precious metals such as gold and silver and U.S. tariffs that were launched a year earlier.

Swiss consultancy LuxeConsult founder Oliver Müller said in the report that the war’s impact would be substantial because of Switzerland’s export footprint. “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,” Müller said. He also said some markets in the Middle East have been effectively halted, adding that in the United Arab Emirates, “60% of business is done with tourists,” so “you can imagine that nothing is going on currently.”

The Watches and Wonders show itself is designed to drive deals and showcase innovation, and the AP report described it as an industry “elite gathering” featuring about 65 exhibiting brands worldwide, with roughly 450 watchmakers based in Switzerland overall. The fair is expected to draw about 60,000 visitors. Watches and Wonders CEO Mathieu Humair told AP that “We have very few cancellations,” and that the organizers had to adjust some travel but were “expecting a record edition in terms of numbers of visitors.”

For some of the industry’s larger players and spokespeople, the event’s positioning is also tied to how competition is shifting across brands and price tiers. AP said celebrity guests at the opening included tennis star Jannik Sinner and actor Patrick Dempsey. It also said Morgan Stanley’s Swiss Watcher report—assembled with LuxeConsult—set out the sector’s recent performance and concentration, including that four Swiss brands—Rolex, Cartier, Patek Philippe and Omega—account for over half of Switzerland’s total retail market share.

The report described the most recent snapshot from Morgan Stanley and LuxeConsult as part of a broader caution. In February, Morgan Stanley’s Swiss Watcher report said Swiss watch exports declined 1.7% last year in value terms, a period it associated with the Swiss franc being relatively strong against the U.S. dollar and the euro, and the report said it was a second consecutive year of market contraction. Industry analyst Ming Liu said that when looking back at a year earlier, the theme had been “the tariffs and the uncertainty,” and added that “we aren’t anywhere closer to certainty, probably even less with what’s happening in the Middle East.”

AP also said the upper-end of the market—watches priced above 50,000 francs (more than $63,000)—has been expanding even as overall exports contract. Morgan Stanley’s report said those hand-crafted watches made up 37% of the total value of Swiss watch exports last year, up from 33.5% in 2024, and it said the segment’s scale is one reason Swiss-made brands have remained prominent.

Despite the uncertainty, AP reported that Switzerland still stands out in the global luxury watch business. Morgan Stanley said Swiss-made watches represent about 96% of the global luxury watch market, defined by watches that retail for at least 2,000 francs (more than $2,200), and it cited Japan’s Grand Seiko as the “most credible non-Swiss challenger” alongside India’s Titan, which it said is trying to compete at the top tier.

The AP report linked the industry’s current planning challenge to the combination of war-driven disruptions and trade and pricing pressures that have accumulated over the past year. It noted that President Donald Trump imposed exceptionally high U.S. tariffs on Swiss goods last year, reaching a peak of 39%, and described a later sequence in which a delegation of Swiss business executives traveled to the White House and offered Trump gifts, including a Rolex clock, in November, with a deal announced the following month that sharply lowered U.S. tariffs on Swiss products.