Watches of Switzerland Group Plc is facing a financial crisis after a new US trade policy. The company’s shares fell by as much as 6% today, as President Trump has levied a 39% tariff on goods imported from Switzerland, one of the steepest rates globally, directly impacting the retailer. As a key seller of Swiss timepieces like Rolex, the company is at the epicenter of this financial disruption.
The company’s stock drop highlights the immediate investor concern about the tariff’s impact on its US operations and profitability. The new duty threatens to significantly increase the cost of its products, potentially leading to a decline in sales. While Watches of Switzerland was hit hard, other major Swiss watch producers, Richemont and Swatch Group AG, were given a brief reprieve, as Swiss financial markets were closed for a holiday.
This new tariff is the latest development in a tumultuous period for the Swiss watch industry. Earlier in the year, a threatened 31% tariff had caused a temporary surge in exports as importers raced to get ahead of the duties. This was followed by a lull as optimism for a more moderate resolution grew. The new, more severe 39% rate has now created a fresh wave of concern and instability throughout the industry.
If the tariff is enacted, the consequences for American consumers will be significant. According to Jefferies analysts, the 39% duty could result in price increases of over 20% on Swiss watches. This potential price shock comes at a time when the market is already facing headwinds from “luxury fatigue.” The one-week delay before the tariff takes effect, however, suggests it may be a “negotiating tactic,” leaving open the possibility of a last-minute change.