The financial world is on high alert after Watches of Switzerland Group Plc’s shares fell by as much as 6% following a new trade policy announcement. US President Donald Trump has imposed a 39% tariff on imports from Switzerland, a rate that is among the highest globally. The luxury retailer, which has a significant presence in the US and sells high-end Swiss timepieces, is directly in the firing line of this escalating trade war.
The company’s stock drop was a direct reflection of investor anxiety over the financial implications of the tariff on its crucial US business. The new duty threatens to significantly raise the cost of its products, potentially hurting sales and profitability. The timing of the announcement meant that major Swiss producers like Richemont and Swatch Group AG were initially shielded from the immediate market fallout as Swiss markets were closed for a holiday.
This new tariff is a major escalation after a period of trade volatility. Earlier in the year, a threatened 31% tariff had caused a surge in exports as importers tried to beat the deadline. This was followed by a slump as hopes for a more favorable trade outcome were high. The new 39% rate now represents a more serious and definitive challenge to the industry’s stability, dashing hopes for a diplomatic solution.
If the tariff is fully implemented, the impact on American consumers will be significant. According to Jefferies analysts, the 39% duty could lead to price increases of more than 20% on luxury Swiss watches. This price shock comes at a time when the market is already grappling with broader issues, including a downturn in consumer sentiment. However, the one-week delay before the tariff takes effect suggests it may be a “negotiating tactic,” leaving open the possibility of a last-minute change.