Watches of Switzerland shares fall 7% after Trump’s new tariffs

London – Shares of Watches of Switzerland Group Plc dropped more than 7% on Thursday following a major policy move by U.S. President Donald Trump, who announced a sweeping 39% tariff on imports from Switzerland. The decision, part of a broader trade strategy targeting 92 countries, triggered concern among investors, particularly due to the impact on the luxury retail sector.

Watches of Switzerland, which sells high-end brands including Rolex, Omega, and Patek Philippe, relies heavily on the U.S. market for revenue. The company’s stock fell sharply during early trading, closing down 7.3% on the London Stock Exchange. Analysts expect the newly imposed tariffs to significantly disrupt pricing structures and reduce margins, especially in the U.S., where consumer prices may now rise by more than 20%.

Earlier this month, the company had reported record revenues of £1.65 billion for the fiscal year ending April 27, 2025. Despite growth in revenue and adjusted EBIT of £150 million, its pre-tax profits had declined 18%, largely due to increased finance costs, expansion-related expenses, and a £43.6 million property impairment. The latest trade developments are likely to place further strain on future performance.

Brian Duffy, CEO of Watches of Switzerland, noted that several watch brands had already implemented mid-single-digit price increases in the U.S. and lowered distributor margins in anticipation of higher trade costs. He warned that such tariffs could further dampen consumer sentiment and squeeze profitability.

The Swiss government reacted critically to the U.S. decision, expressing disappointment and emphasizing the unexpected nature of the move. Officials indicated that discussions with U.S. trade counterparts had appeared to be progressing, and called the tariff a threat to long-standing bilateral relations. Switzerland’s total exports to the U.S. in 2024 were valued at over CHF 65 billion, with Swiss watch exports accounting for CHF 4.4 billion.

Meanwhile, global financial markets responded to the broader tariff escalation. U.S. stock futures slipped nearly 1%, and European indexes followed suit. The luxury goods segment, in particular, experienced a modest downturn as investors assessed the implications of rising protectionism on global trade.

For Watches of Switzerland, the pressure is likely to persist in the near term. While the company has not yet announced any major pricing adjustments or operational changes, analysts suggest the retailer may have to explore cost-sharing measures with suppliers or reduce dependence on U.S. sales to offset the impact.

As the global trade environment becomes increasingly volatile, luxury retailers are finding themselves at the center of geopolitical tensions. Watches of Switzerland now faces a complex balancing act, protecting its margins while maintaining competitiveness in one of its most lucrative markets.