Tariffs and the Future of American Watchmaking

So far in our series exploring the effects of the U.S. government’s newly levied tariffs on Swiss watch imports, we have looked at the possible repercussions on both the new and preowned markets, here and internationally.

For this final article, we are going to try and predict how they may impact the American watchmaking industry itself. 

The Whole Point

As with the majority of times in history when a country has introduced tariffs, one of the main reasons cited by the government for this round is to help domestic businesses. 

On the surface it certainly makes sense. Issuing a tax, and especially a huge 39% one, on imported Swiss made watches will have the knock-on effect of those watches getting significantly more expensive for American consumers. Even with Swiss brands offsetting some of that cost themselves, either by reducing profit margins or streamlining manufacturing processes, the best guess seems to be that dealers in the States will have to increase the prices of their Swiss models by as much as 30%.

That is very likely to price-out a huge number of people who were once potential customers. But those same people will still want a luxury watch and, it is hoped, they will then turn to native brands. 

So, should we all prepare for another golden era in American watchmaking? Maybe. But maybe not.

The Problem

Once upon a time, somewhere between the late 19^th and early 20^th centuries, American watchmaking ruled the world. U.S. pocket watches were the global benchmark, in part due to the timekeeping standards demanded by the railroads following the Kipton, Ohio train disaster of 1891 caused by a faulty watch, along with pioneering interchangeable parts and innovative assembly line techniques, long before the Swiss embraced them.

Companies such as Elgin, Hamilton and Waltham led the way in precision and mass production efficiency and nearly every man in the country who owned a pocket watch was likely carrying an American-made one.

Of course, all things come to an end and the combination of the Great Depression and the rise of the wristwatch meant that by the 1950s, Switzerland had overtaken the U.S. in prestige and volume and by the ‘80s, there was barely any watchmaking in the country at all. 

The question is: will the punitive tariffs now imposed on Swiss imports take us back to those heady days of a century ago? 

Well, it is unlikely to happen anytime soon. For the most part, American watchmaking brands fall into one of two camps. On the one hand you have startups and microbrands. These are tiny in scope, usually with fewer than 10 employees, which produce limited-run models in the $300-$800 range and sell online direct to consumers—think Farr & Swit and Autodromo. 

On the other, we get high-end artisanal workshops. These generally have either a single watchmaker or, at best, a small handpicked team. Here, production is often even lower than with the startups. Due to complexity and the traditional techniques used, they may only produce a few hundred watches a year. Vortic and RGM Watch Co. are prime examples. 

The tariffs are not going to help the former. In fact, they are probably going to do more harm than good. Microbrands rely on imported components, such as Japanese or Chinese movements, Swiss tooling, etc. Tariffs have now made those more expensive, escalating production costs and, ultimately, the price of the watches at the till. That could well kill the demand the tariffs were meant to increase. 

However, the more premium brands could fare better—up to a point. As we said in our previous article, it is the largest sector by volume, mid-tier luxury Swiss models, which are going to suffer most from the new tax. That could leave a very sizeable gap in the market for a true ‘Made in America’ brand to fill. If a watch is genuinely produced and built in the States, obviously the tariffs don’t apply. 

The Further Problem

But is there anyone with the capacity? Americans buy an estimated 360,000 watches every year in the $1,000 to $15,000 range, from the likes of TAG Heuer, Longines, Breitling, Cartier, IWC, Omega, etc. At present, there is nothing even close to that sort of scope across American manufacturers and getting to that point could take a very long time. 

Vortic, for instance, make an average of 500 pieces a year by converting antique pocket watches into wristwatches. RGM make even less, somewhere around 400. The Colorado Watch Company, founded by the same man who established Vortic, R. T. Custer, and which proudly proclaims on their website to be ‘The Most American Watch at Scale Today’ tops out somewhere in the 5,000 to 6,000 range. However, take a look at said website and you will see that both of the models on offer are already completely sold out. 

There are other brands which have an increased capability, of course. Detroit-based Shinola has a theoretical capacity of around half a million models a year. But as they use imported movements, mostly from Switzerland and Thailand, the tariffs are likely to affect them negatively.  

A major drawback for American watchmakers is, ironically, time. Even if vast sums of money were suddenly made available today to this handful of fairly well-established companies, creating an elite-level watch is not something which can be done overnight. It takes months to bring in the necessary machining and tooling. It takes years to train people how to use them. And after all that, it still wouldn’t be possible to make a watch in America at a price which could compete against China. 

But the biggest factor which would prevent anyone investing the necessary capital to even start to make all that happen is the perfectly valid fear the tariffs might well disappear as quickly as they arrived. There is a substantial section of the market that believes the tax is nothing but a negotiation tactic to gain a favorable new trade deal with the Swiss. Should that deal be struck, the tariffs could suddenly plummet.

Will the Tariffs Bring Watchmaking Back to America?

The bottom line is, just like everything else in life and especially business, it’s impossible to know what effects the tariffs will have on American watchmaking.

As of yet, all they seem to have done is cause a deal of instability and confusion and not a little frustration. 

But one thing which is backed by data is that most Americans would welcome the return of a horology industry, and be prepared to support it. A 2024 Deloitte study found that 68% of wealthy U.S. buyers stated they would pay a premium for American-made luxury goods. How much of a premium, though, was not made clear.

As always, we’ll have to wait and see.