The financial world is buzzing with news of a major trade action that has directly impacted a key player in the luxury watch market. Shares of Watches of Switzerland Group Plc fell sharply, losing as much as 6% of their value after US President Donald Trump announced a new 39% tariff on Swiss imports. As a leading retailer of iconic Swiss brands like Rolex, the company is highly exposed to this escalating trade war, and investors were quick to express their concerns.
The immediate reaction on the stock market was a direct hit to the retailer, whose business model relies on the flow of Swiss goods into its American stores. The tariff’s imposition at a staggering 39% is a clear and present danger to its profitability in the US. The initial market fallout was uneven, with Watches of Switzerland taking the hit while major Swiss manufacturers like Swatch Group and Richemont were protected from the day’s trading due to a holiday in Switzerland.
The new tariff represents a major turning point after a period of mixed signals. Earlier in the year, a threatened 31% tariff had caused a temporary surge in exports as importers tried to get ahead of the duties. This was followed by a cooling-off period as optimism for a more diplomatic resolution grew. The new 39% rate now makes it clear that the trade tensions are intensifying, posing a more serious challenge to the industry.
Looking ahead, analysts are bracing for a difficult period. Jefferies analysts warn that if the tariff is fully implemented, American consumers could see prices for Swiss watches jump by more than 20%. The good news, if there is any, is that the tariff’s implementation is not immediate. The one-week delay is seen by some, including Jefferies’ James Grzinic, as a potential window for negotiation. This suggests the tariff may be a powerful tool in a high-stakes bargaining game, rather than a final policy.