The financial world is abuzz with news of a major trade action that has directly impacted the shares of Watches of Switzerland Group Plc. The company’s stock fell by as much as 6% following US President Donald Trump’s announcement of a 39% tariff on Swiss imports. As a leading retailer of prestigious Swiss timepieces in both the UK and the US, the company is directly in the firing line of this escalating trade war.
The steep drop in the company’s stock price underscores the gravity of the situation for its business. The tariff threatens to significantly increase the cost of doing business in the US, potentially squeezing profit margins and reducing consumer demand. While Watches of Switzerland was hit hard, major Swiss watch producers like Swatch Group and Richemont were given a brief respite, as Swiss financial markets were closed for a holiday.
This new tariff marks a dramatic escalation after a period of intense uncertainty. The Swiss watch industry had already experienced significant volatility earlier in the year when a 31% tariff was threatened, leading to a surge in pre-emptive exports. This was followed by a lull as hopes for a more moderate resolution grew. The new 39% rate, however, now signals a more aggressive and potentially damaging phase of the trade conflict.
If the tariff is fully implemented, the consequences for American consumers could be substantial. According to Jefferies analysts, a 39% duty could result in price increases of over 20% for Swiss watches, a significant burden for luxury buyers. The market remains in a state of flux, however, as the one-week delay until implementation has raised questions. This pause, according to analysts, could be a strategic “negotiating tactic,” a final attempt to pressure Switzerland into concessions.
Picture Credit: www.rawpixel.com
