Full Breakdown
Impact of the Iran Conflict on the Luxury Watch Industry
4/14/2026, 1:22:26 PM
Overview of the Current Situation
The ongoing conflict in the Persian Gulf, particularly the war initiated by the U.S. and Israel against Iran on February 28, 2026, has significantly affected the luxury watch industry, a sector known for its high-value products. As the annual "Watches and Wonders" fair commences in Geneva, the industry faces renewed challenges, including rising energy prices, disrupted supply chains, and declining consumer confidence.
Economic Implications of the Conflict
The war has led to increased prices for essential materials, notably precious metals like gold and silver, which are crucial for luxury watch manufacturing. Philippe Pegoraro, chief economist at the Federation of the Swiss Watch Industry, anticipates a sharp decline in official export figures for March due to logistical issues and reduced demand. While local purchases in the United Arab Emirates remain stable, the decline in tourist traffic—especially in key sales locations like Dubai airport—has negatively impacted overall sales.
Market Trends and Challenges
The luxury watch market has already experienced two consecutive years of contraction, with Swiss watch exports declining by 1.7% in value last year, according to a report by Morgan Stanley. The report highlights that despite the challenges, the upper-end segment of the market is growing, with handcrafted watches priced over 50,000 francs (approximately $63,000) accounting for 37% of total Swiss watch exports in the previous year, up from 33.5% in 2024. Notably, four brands—Rolex, Cartier, Patek Philippe, and Omega—dominate over half of the Swiss retail market share.
Official Statements & Responses
Industry analyst Ming Liu noted the persistent uncertainty surrounding the luxury goods sector, stating, “When you look back at a year ago, the sort of theme was: The tariffs and the uncertainty. Unfortunately, we aren’t anywhere closer to certainty, probably even less with what’s happening in the Middle East.” This sentiment reflects the broader concerns within the industry as it grapples with external pressures.
Criticism & Opposition
Critics argue that the ongoing geopolitical tensions and economic instability are overshadowing the potential for recovery in the luxury watch market. The impact of U.S. tariffs, which peaked at 39% last year—the highest faced by any developed Western country—has also drawn scrutiny. A delegation of Swiss business executives had previously sought to mitigate these tariffs by presenting gifts to U.S. officials, indicating the lengths to which the industry is willing to go to protect its interests.
Verbatim Quotes
- “Rebuilding confidence is going to take some time,” — Philippe Pegoraro, Chief Economist, FH
- “That’s obviously going to have a cloud over Watches and Wonders,” — Ming Liu, Industry Analyst
Conclusion
As the luxury watch industry navigates the complexities introduced by the Iran conflict and its economic ramifications, the upcoming "Watches and Wonders" fair will serve as a critical barometer for the sector's resilience and adaptability in the face of ongoing uncertainty.
