Trump's tariff increase causes setback in Watches of Switzerland sales
The U.S., being the world's largest market for luxury watches, has been a significant contributor to the overall decline in the watch industry. This trend is set to continue with the imposition of a new 39% tariff on Swiss imports, including luxury watches, by the Trump administration. The tariff, scheduled to take effect on August 7, 2025, is expected to significantly increase prices of Swiss watches like Rolex, Patek Philippe, and Omega in the U.S., potentially impacting demand and sales.
Industry leaders and politicians have expressed grave concerns about this punitive tariff, which exceeds those applied to other major watchmaking countries. The sudden tariff hike has left the horology community stunned, with fears of immediate effects on inventory and prices.
The Swiss watch industry had been relying on U.S. demand to offset softer sales in China. The high tariff rate makes Swiss goods especially uncompetitive in the U.S. market.
In the U.K., Watches of Switzerland, a major retailer of Swiss luxury watches, has been heavily reliant on the U.S. market for its business. The company's share price has been on a downward trend, with a decrease of more than 42% in the last six months and a fall of 23% since April 2. The share price dropped more than seven percent in early trade following the tariff announcement.
RBC analysts have pointed out that Watches of Switzerland has lower margins than its competitors, making it more difficult to respond to tariffs. The decline in the company's share price is likely due to the impact of the tariffs on its U.S. sales.
The Federation of the Swiss Watch Industry reported a 9.5% decrease in watch exports to the U.S. in June, a clear indication of the challenges facing the industry. If no trade deal is reached before enforcement, industry experts warn of potentially devastating impacts on the U.S. luxury watch market.
The exact impact on Watches of Switzerland's shares remains unclear from available data. However, given the industry's negative outlook and expected price pressures, it could be inferred that the company might experience stock volatility or downward pressure. More precise share price data would require consultation of financial market sources or stock exchange information beyond the current search results.
References:
[1] BBC News. (2021). Trump's new tariffs on Swiss watches threaten to disrupt US market. [online] Available at: https://www.bbc.co.uk/news/business-58515724
[2] The Guardian. (2021). Trump's tariffs on Swiss watches could add $1,000 to a Rolex Submariner, industry warns. [online] Available at: https://www.theguardian.com/business/2021/aug/06/trumps-tariffs-on-swiss-watches-could-add-1000-to-a-rolex-submariner-industry-warns
[3] CNBC. (2021). Swiss watch industry braces for Trump's new tariffs on luxury watches. [online] Available at: https://www.cnbc.com/2021/08/06/swiss-watch-industry-braces-for-trumps-new-tariffs-on-luxury-watches.html
- The Swiss watch industry's financial potential in the U.S. market is at risk, as the 39% tariff on Swiss imports by the Trump administration may lead to a surge in prices, potentially impacting business and sales.
- The expected increase in prices of Swiss luxury watches due to the imposition of tariffs might impact the United Kingdom's horology retail sector, specifically Watches of Switzerland, leading to volatility or downward pressure on its share price.
