The stock market reacted swiftly and harshly to President Trump’s new trade policy, with Watches of Switzerland Group Plc’s shares taking a major hit. The company’s stock price fell by as much as 6% following the announcement of a 39% tariff on Swiss imports, a move that sent a shockwave through the luxury goods industry. This new tariff, one of the steepest in the world, puts significant pressure on retailers that rely heavily on Swiss-made products.
As a major retailer of brands like Rolex and other high-end watches, Watches of Switzerland is uniquely exposed to this new trade barrier. The immediate and steep drop in its share price reflects investor concern about the company’s ability to navigate the new economic landscape, particularly in its growing US market. The timing of the announcement meant that Swiss-based companies like Richemont and Swatch Group AG did not see an immediate impact, as their markets were closed for a holiday.
The current trade situation is a continuation of a pattern of disruption. Swiss watch exports had already seen significant volatility in recent months. An earlier threat of a 31% tariff had led to a spike in exports as importers front-loaded orders. This was followed by a subsequent drop, as optimism for a more moderate tariff rate grew. This new, more severe tariff now poses a substantial threat to the stability of the entire industry.
Analysts are now scrambling to predict the full impact. According to a team at Jefferies led by James Grzinic, a 39% tariff would likely translate into price increases of more than 20% for American consumers. The market remains in a state of flux, however, as the tariff’s implementation has been delayed by a week. This pause has led to speculation that the tariff is a strategic tool, a way for the administration to gain the upper hand in negotiations rather than a final policy decision.