The global trade war has intensified with a new, aggressive tariff from the US, directly impacting the stock price of Watches of Switzerland Group Plc. The company’s shares fell by up to 6% after US President Donald Trump announced a 39% tariff on Swiss imports, a rate that is one of the steepest globally. This new duty has put the luxury retailer, a key seller of Swiss timepieces, in a precarious position.
As a company with a significant US retail footprint, Watches of Switzerland is on the front line of this trade dispute. The stock market’s rapid decline reflects the high level of investor anxiety over the potential for reduced sales and profitability in its American market. Other major Swiss watch companies, such as Richemont and Swatch Group, were spared from the immediate market fallout due to a public holiday that had shuttered Swiss financial markets for the day.
The new tariff represents a major escalation after a period of intense uncertainty. The Swiss watch industry had already experienced a turbulent year, with an earlier threat of a 31% tariff causing a temporary rush in exports. This was followed by a lull as hopes for a lower tariff rate grew, only to be dashed by the new, more severe 39% rate. This has created a new level of instability for the industry.
Looking ahead, the consequences for consumers are significant. According to a team of analysts at Jefferies, the 39% tariff could lead to price increases of over 20% for Swiss watches in the United States. This potential price shock comes at a time when the market is already facing headwinds from “luxury fatigue” and declining consumer sentiment. The one-week delay before the tariff takes effect, however, offers a small window of hope that this is a “negotiating tactic” rather than a final policy.