Luxury Watch Stocks Stumble as Trump Slaps 39% Tariff on Swiss Imports
Shares of Watches of Switzerland Group plunged 7.3% in early trading Thursday after former President Donald Trump imposed immediate 39% tariffs on Swiss imports through Executive Order 14308, targeting $6 billion in annual U.S. watch imports. The policy shift – one of the highest luxury goods tariffs in modern history – threatens to upend pricing strategies for Rolex, Patek Philippe, and other premium brands that dominate the $28 billion global luxury watch market.
Market Reaction Spreads Beyond Retailers
- Watches of Switzerland (LSE: WOSG) fell to 52-week low of £4.18
- Swatch Group ADRs (SWGAY) declined 4.2% in premarket trading
- Richemont (CFR:SW) slid 3.1% as markets opened in Zurich
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Margin Pressures Meet Stubborn Inflation
The tariff announcement forces manufacturers to choose between absorbing costs or raising prices on timepieces that already saw 14% average price increases since 2022. “This creates a perfect storm for luxury watchmakers,” said Jessica Lowell, senior analyst at Bernstein. “They’re caught between protecting margins and maintaining exclusivity in a market where 73% of buyers consider price sensitivity.”
Global Trade Tensions Resurface
The 39% tariff rate on imports from Switzerland comes as U.S.-EU trade relations show renewed strain. Administration officials cited Switzerland’s 27% average tariff on U.S. agricultural products as justification, though luxury goods comprised just 12% of bilateral trade disputes before this action.
Market watchers note historical parallels to 2018’s “steel tariff shock,” when S&P 500 industrials lost $190 billion in market value over six weeks. However, luxury goods’ inelastic demand could blunt immediate impacts – a Morgan Stanley analysis notes Rolex waitlists currently average 2.5 years globally.
The Road Ahead for Timepiece Markets
With tariffs effective in seven days, brands face urgent decisions. Secondary markets may benefit – Chrono24 reported 18% spike in U.S. pre-owned watch inquiries post-announcement. Longer-term, analysts suggest manufacturers could accelerate U.S. production efforts, though Swiss “Made” labeling requirements complicate relocation strategies.
