Geopolitical uncertainty is weighing on the Swiss watch industry, whose exports have been declining for two years. Yves Bugmann, President of the Federation of the Swiss Watch Industry, outlines the sector’s strengths as it navigates this turbulent period.
The Swiss watch industry recorded a decline in exports for the third consecutive year in 2025 (-1.7% compared with 2024, to 25.6 billion francs). Inflation, the slump in luxury goods consumption in China and successive tariff announcements from the White House largely explain the sector’s performance. The industry exports 95% of its output, with the United States as its main market. An unstable geopolitical environment, which is pushing up the price of precious metals and strengthening the Swiss franc, is also weighing on exports. This unsettled period is prompting companies to diversify and seek new trading partners, as reflected in the recent free trade agreements negotiated with Thailand, India, and Mercosur. Yves Bugmann, President of the FH, discusses these developments and how the sector is adapting to meet these challenges.
How is the Swiss watch industry responding to the current geopolitical context?
Yves Bugmann: The sector has shown considerable flexibility in responding to the uncertainty surrounding the various tariffs imposed by the United States, exporting as many products as possible before the announced rates came into effect. The FH is also closely monitoring discussions on the new package of bilateral agreements with the European Union. Beyond free trade agreements, it supports arrangements on the free movement of persons and on electricity in order to ensure a secure supply at competitive prices.
How is the sector absorbing increases in raw material prices and tariffs?
Bugmann: Whether it concerns tariffs or currency appreciation, brands cannot simply pass these costs on in full to consumers. Each brand adopts its own strategy to offset these increases. "Swiss Made" also remains a strong and widely recognized selling point internationally. One of the FH’s key roles is to ensure compliance with the Swiss Made Ordinance for watches. For example, at least 60% of production costs must be generated in Switzerland, research and development must take place there, the watch must be fitted with a Swiss movement, and final inspection and assembly must be carried out in Switzerland. We have registered the "Swiss Made" trademark, notably in the United States, the European Union, and Hong Kong.
What other challenges is the Swiss watch industry currently facing?
Bugmann: Like many industries, the watch sector is affected by changing consumer behavior. We are seeing growth in online sales. However, a watch remains a complex product, and many customers still prefer to try it on and receive advice from qualified staff before making a purchase. Another underlying trend is the increasing importance customers attach to sustainability. The sector is working to reduce energy consumption and adopt even more environmentally responsible production methods. A Swiss watch is, by its very nature, a durable object, intended to be passed down from generation to generation.
How will the sector benefit from the recently concluded free trade agreements with India, Mercosur, and Thailand?
Bugmann: Free trade agreements help reduce trade barriers while also providing legal certainty and much-needed stability, particularly in turbulent times such as those we are currently experiencing. These agreements also generally include provisions on the protection of intellectual property rights, aimed at combating counterfeiting. In the case of India, for example, tariffs are set to be reduced progressively from 20% to 0% over seven years. India currently ranks 20th among our main export markets, but we expect this to improve significantly.
What innovation strategies is the sector pursuing to remain among the world’s most innovative industries for 14 years, according to WIPO?
Bugmann: Brands and subcontractors are constantly seeking new materials and technical solutions. In this area, we benefit from the support of our educational institutions, which train skilled professionals. Brands also collaborate with the Swiss Center for Electronics and Microtechnology (CSEM). The sector would also like Switzerland to participate in research programs such as Horizon in order to benefit from European initiatives. A large share of innovation, however, comes directly from watch brands themselves, driven by competition within the sector.
How do the sector and the FH approach artificial intelligence?
Bugmann: The FH uses AI tools to combat counterfeiting. In terms of production, however, we are still a long way from replacing the expertise of watchmakers, which forms part of our DNA and, in my view, remains irreplaceable. This expertise is also highly valued in other fields: our subcontractors work with the automotive and medical industries, which are drawn to the precision and miniaturization characteristic of our sector. Furthermore, watch brands also place great emphasis on human expertise when it comes to watch design.
