Trade War Fears Roil Markets: Watches of Switzerland Stock Dives on New Tariff

Global financial markets are reacting sharply to the news of a new US trade policy, with Watches of Switzerland Group Plc’s stock falling by 6%. The reason for the market unease is a newly announced 39% tariff on Swiss goods, a rate that is among the highest in the world. As a key player in the luxury watch market, selling prestigious brands like Rolex, Watches of Switzerland is at the forefront of this economic storm.
The steep drop in the company’s shares is a testament to the immediate concerns of investors. They fear that the tariff will drastically increase the cost of its products, a burden that will likely lead to higher prices for consumers and a subsequent decline in sales. The company was the first to feel the brunt of the news, while Swiss-based competitors Richemont and Swatch Group AG were temporarily unaffected due to a holiday closure of the Swiss financial markets.
This tariff marks a new and more aggressive phase in a year-long saga of trade tensions. The industry had previously weathered a threat of a 31% tariff, which led to a scramble of exports followed by a period of calm. The new 39% rate, however, has reignited the market’s fears and created renewed uncertainty for the entire sector.
The consequences for American consumers are projected to be significant. According to analysis from Jefferies, the new 39% duty could result in an increase of over 20% on the price of Swiss watches. This potential price shock looms at a time when the market is already grappling with a trend of “luxury fatigue.” However, the one-week delay before the tariff takes effect has sparked speculation that this may be a “negotiating tactic,” leaving open the possibility of a last-minute change.