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This post is for John Dee who has a passion for high quality time pieces.  It also underscores how  dangerously  wrong headed Trump is with his Tariff war.

How Tariffs Destroy an Industry: A Case Study

A policy based on lies, that will accomplish nothing except pain and wanton economic destruction.

Jonathan V. Last

Apr 09, 2025

∙ Paid

1. Watch Talk

You should write about what you know, so I want to explain what Trump’s tariffs are going to do to the watch industry.

Some caveats and clarifications up front:

• The watch industry is not important.
• If all mechanical watchmaking disappeared tomorrow, the world would barely notice.
• Conversely, if people who spend hundreds, or thousands, of dollars for gadgets that are inferior at timekeeping to a $25 Timex have to spend extra money on their gadgets? Who cares. This is the sound of the world’s smallest violin.1

The only point in discussing watches is to illustrate three larger principles about Trump’s tariffs:

1. They are based on lies.
2. They will not work in their stated goal of “bringing manufacturing back to America.”
3. Instead, they will cause needless economic hardship.

So let’s dive in.

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There is a guy on YouTube named Mike. He’s South African but lives in Denmark. He’s a middle-aged professional. He works in consulting.2 He is militantly apolitical. He knows a great deal about the watch business.

Yesterday, Mike cut a video walking through what Trump’s tariffs will do to the Swiss watch industry.

You should watch the whole thing, but if you don’t want to spend 20 minutes on Watch Content, I’ll give you some highlights:

• The bulk of the watch industry is located in Switzerland.
• Trump imposed a 31 percent tariff on Swiss goods.
• Switzerland tariffs U.S. goods on the order of magnitude of 1 percent or 2 percent. This is not a “reciprocal” tariff.
• In general, you can divide watches into two categories: “Swiss Made” and “Non-Swiss Made.”
• Swiss Made watches are assembled in Switzerland and must have a certain percentage of components that are also made in Switzerland.
• Non-Swiss Made watches can be assembled in any country, but typically rely on components made in China (34 percent tariff), Japan (24 percent), or Thailand (36 percent).3
• The United States has only a handful of (small) watch brands that do assembly domestically and has no—zero—meaningful domestic watch component manufacturing.
• Making watch components is a costly, high-precision process. It requires specialized facilities and a specifically skilled workforce, neither of which exist in the United States.
  • There are no existing component factories which could be expanded; there is no American labor pool of workers trained in watchmaking.
• Rolex, for example, is the biggest watch company in the world. They are in the midst of a multiyear expansion of manufacturing capacity in Switzerland. This expansion will not be complete until 2029.
  • Is Rolex going to stop this expansion midway through and move the facilities to America? Absolutely not. This would be cost-prohibitive.
  • Same with every other brand. The component manufacturers are highly specialized, low-volume operations that are often independent and not part of multinational corporations. And watchmakers need their brands and final assembly to be tightly integrated with their suppliers since component tolerances are so unforgiving.

So there are the lies (the tariffs aren’t “reciprocal”) and the base facts (watchmaking is never coming to America).

What happens, then?

• Watch brands will have to either take fewer profits from each unit, or raise prices. They will probably opt to do some of each, as their margins allow.
• The larger watch conglomerates—Rolex, the Swatch Group—will be better able to weather this hit than smaller operations, which have tighter margins.
• Some smaller brands are likely to be pushed out of business.
• Do prices go up onlyin the United States? Probably not.
  • Most likely scenario is that, Brand X raises prices in the United States by some percentage and then raises prices globally by some other, smaller percentage—in effect having global customers subsidize U.S. consumers to some degree.
• This is inflationary. Full stop.
• Also: The effects ripple out.
  • Fewer watches will be sold in the United States.
  • Meaning that retailers who sell watches will have to retrench.
  • And also: There is a small world of Americans who work in sales, repairs, and importing, who will also be adversely affected.

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Next I want you to meet Marc Frankel. Marc is an importer who is a well-respected watch seller. He was successful enough that a few years ago he launched his own microbrand, Islander Watches. I’ve dealt with Marc a lot over the years.4 He’s a good guy, a straight shooter. Dude just loves watches.

Last week he explained, in detail, how the tariffs are going to impact his business.

In the video Marc opens up his books for viewers and shows the real numbers. And it’s bad.

This guy is an entrepreneur. He created a business that thrived. It was successful enough that he was able to start his own watch brand—which is every watch nerd’s dream.

And now he’s going to be pushed to the brink by a policy regime that’s based on a lie and won’t achieve anything except wanton destruction.

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Like I said: Watches don’t matter to the broader economy. But this story is going to be replicated tens of thousands of times, in sector after sector. And while each instance is insubstantial on its own, the cumulative weight will be crushing.

1  I mean, I care, because I love watches. But I’m not saying that you should care. I’m not asking for sympathy here.

2  Mike is such a watch nerd that he keeps a spreadsheet where he tracks TWT (total wrist time) for each of his watches so that, at the end of the year, he knows precisely how many hours he wore each of his watches.

Is this amazing or a cry for help?

Amazing. The answer is: AMAZING.

3 Which means that even if you moved all assembly to the United States, the components will still be subject to massive tariffs.

4 When I had Bulwark watches made for the team in 2020, I worked with Marc to get the custom pieces made. He’s a mensch.

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