The world of luxury goods is in turmoil, as Watches of Switzerland Group Plc’s shares fell by up to 6% following the announcement of a new tariff. 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 timepieces, is directly in the crosshairs of this financial disruption.
The company’s dual presence in the UK and US makes it particularly vulnerable to trade policy shifts that affect its core product lineup. The steep sell-off in its stock reflects investor concern that the company’s profitability and sales in the US will be negatively impacted by the new duty. The initial market fallout was uneven, with Watches of Switzerland taking the hit while major Swiss manufacturers like Swatch Group and Richemont were protected by a public holiday.
The new tariff represents a dramatic escalation 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 beat the deadline. This was followed by a cooling-off period as optimism for a more diplomatic resolution grew. The new, more severe 39% rate has now dashed those hopes and renewed concerns about the industry’s future.
The potential economic consequences for consumers are stark. According to Jefferies analysts, a 39% tariff could lead to price increases of over 20% on luxury Swiss watches sold in the United States. This potential price shock comes at a time when the luxury market is already showing signs of a slowdown. The one-week delay until the tariff’s implementation, however, has led to speculation that this is a “negotiating tactic,” a final attempt to pressure Switzerland into concessions before the duty takes effect.