A global trade dispute has landed squarely on the balance sheet of Watches of Switzerland Group Plc, causing its shares to fall sharply by as much as 6%. The company is reeling from the news that US President Donald Trump has imposed a 39% tariff on imports from Switzerland, a move that is among the most aggressive in the current trade war. The retailer, which sells Rolex and other high-end Swiss watches, is directly exposed to the financial implications of this new duty.
The market reaction was immediate and punishing for Watches of Switzerland, whose dual presence in the UK and US makes it a bellwether for the international luxury watch market. Its stock price reflects investor anxiety about how the company will absorb the massive cost increase from the new tariff. The market’s initial focus was on the retailer, while major Swiss manufacturers like Swatch Group and Richemont were shielded from the immediate fallout due to a public holiday in Switzerland.
The news of the 39% tariff is the latest twist in a tense saga. Earlier in the year, the threat of a 31% levy had led to a surge in Swiss watch exports as importers rushed to beat the deadline. This period was followed by a slowdown in shipments as hopes for a lower tariff rate grew. Now, the more severe 39% rate has created a fresh wave of concern and uncertainty across the industry.
The long-term impact of the tariff is a major question for the industry. Jefferies analysts warn that the 39% duty, if it becomes permanent, could lead to price increases of over 20% for US consumers. This would be a major blow to a market that is already showing signs of “luxury fatigue,” as noted by Vontobel analyst Jean-Philippe Bertschy. The one-week delay in implementation, however, has led to speculation that the tariff is a political tool, a bargaining chip in a high-stakes negotiation.