Switzerland's watch industry is reeling from an unprecedented triple whammy. A slump in demand from China has collided with Trump's tariff bomb on the U.S. market, and even the Middle East, home to many big spenders, has ground to a halt because of war.
On the 20th (local time) in Geneva, Switzerland, the annual Watches and Wonders, where 65 leading global watch brands rolled out dazzling new models, came to a close. But observers said the mood on the ground felt less like a celebration and more like a shared sense of crisis.
Until the war, the Middle East was one of the few remaining growth pillars for Swiss watches. The region accounts for about 10% of the global watch market, smaller on paper than the United States (17%) or China. But it is a high–value-added market where purchases of ultra-high-end watches priced above 50,000 francs (about 81 million won) are overwhelmingly concentrated. The Federation of the Swiss Watch Industry defines "luxury watches" as those priced above 2,000 Swiss francs (about 3.3 million won). Switzerland boasts a 96% share in this segment. Within that, the Middle East is a core destination for models priced above 50,000 francs.
According to Bloomberg, watch sales in the Gulf reached 2.21 billion Swiss francs (about 3.6 trillion won) last year. In particular, the United Arab Emirates (UAE) and Qatar—both intensively targeted by Iran in the current war—are hub countries that account for more than half of Gulf watch sales. Reuters reports that about 60% of UAE watch revenue comes from duty-free shopping by tourists, not locals.
But as flights were cut off by the war and tourists stopped coming to major UAE cities like Dubai and Abu Dhabi, customers vanished from luxury watch boutiques. Among luxury goods, watches rank among the most expensive items and are classified as "psychological goods" whose purchase decisions require a sense of security. In times of rising anxiety, they are the first items where spending stops.
Sentiment on the ground froze faster than the numbers. LVMH told investors this month that "March demand in the Middle East was 50% below average." It said sales for some brands plunged as much as 70%. Ilaria Resta, CEO of the top-end watch brand Audemars Piguet, called the current phase "a perfect storm across the watch industry." Audemars Piguet temporarily closed its Dubai boutique for safety reasons and only recently reopened. Most stores in Tel Aviv, Israel, are closed and operating only intermittently.
Even before the Middle East war, Switzerland's watch industry was facing a double setback. The first blow came from China. China had long been a key consumer base propping up growth in high-end watches. But after the end of the pandemic, the real estate crisis shut the wallets of big spenders. By the Federation of the Swiss Watch Industry's tally, exports to China fell by more than one-third in two years. With China retreating, not only did unit sales drop, but the turnover of high-priced models also slowed.
The second blow was U.S. tariffs. In April last year, the Trump administration slapped tariffs of up to 39% on Swiss-made goods, crushing price competitiveness in the world's largest consumer market. The tariff was cut to 15% in November the same year under a U.S.-Swiss agreement, then restructured starting in February this year to a new system of a 15% base tariff plus a 10% cap additional tariff. Effectively about 25%, that means prices have jumped by more than a quarter compared with before the tariff. As a result, Swiss watch exports totaled 25.6 billion Swiss francs (about 42 trillion won) last year, down 1.7% from a year earlier. It was the second straight year of contraction after 2024 (-2.8%).
Then the Iran war shook even the last remaining support. As of February 2026, just before the war began, Swiss watch exports rose 9.2% from a year earlier, signaling a brief rebound. Exports to the United States, which had been battered by tariffs, also surged 26.8%, raising hopes of a turnaround. Swatch Group said second-half 2025 sales grew 4.7% year over year at constant exchange rates, with fourth-quarter growth recovering to 7.2%. Swatch Group is the world's largest watchmaking group, spanning top-tier brands such as Breguet, Blancpain and Harry Winston to mid- and lower-priced brands including Omega, Longines, Tissot, Hamilton and Swatch. The Swiss watch industry read this as a sign that it had passed the bottom.
But the recovery narrative was erased in an instant by the protracted Iran war. Elie Bernheim, CEO of the high-end watch brand Raymond Weil, which gets 10% of its sales from the Middle East, told Reuters it was "another crisis after the 2008 financial crisis, the advent of smartwatches, COVID-19 and U.S. tariffs." The diagnosis is that the unpredictability caused by war is the biggest problem for the luxury watch industry.
The Middle East war shock is not confined to the watch industry. LVMH said its group sales grew 1% in the first quarter this year, adding that "without the Middle East shock, it would have been 2%." Hermès posted Middle East sales of 160 million euros (about 254 billion won) in the first quarter, down 6% from 185 million euros (about 294 billion won) a year earlier. Hermès CFO Eric du Halgouet said, "1.5 percentage points of quarterly growth were shaved off because of the war." Kering also saw Middle East retail sales fall 11% in the first quarter of 2026. In short, the big-spender market the luxury watch sector relied on has collapsed wholesale.