Watches of Switzerland experienced a sharp decline in its share price, dropping over seven per cent in early trading as the market reacted to President Trump's new tariffs.
On Friday morning, Trump unveiled a tariff rate of 39 per cent on Swiss exports to the US, surpassing the initial 'Liberation Day' tariff of 31 per cent, as reported by .
Chris Beauchamp, chief market analyst at IG, commented that the tariffs "revive fears of renewed price increases for consumers... most obviously in the US, but potentially around the rest of the world too."
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Brokerage firm Peel Hunt has cautioned that US watch prices could see a rise of 10 to 15 per cent due to the original 31 per cent tariff, with the increase now likely to be even steeper – a troubling forecast for an industry already grappling with demand issues.
Analysts at RBC have noted that compared to its rivals, the watch company operates with slimmer margins, which complicates its ability to mitigate the impact of tariffs.
Earlier this year, Trump targeted Switzerland as one of the primary offenders in unfair trade practices with the US. The trade deficit between the US and Switzerland reached CHF 38.5bn (£33.9bn) last year.
According to the Federation of the Swiss Watch Industry (FH), exports of watches to the US dropped by 9.5 per cent in June May, halting a recovery in sales that had been taking shape earlier in the year.
The US, being the largest global market for luxury watches, was the principal contributor to the overall downturn.
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Regrettably, Watches of Switzerland has been banking on a surge in US demand, which was the firm's primary driver in the six months prior to tariffs. The company's share price has plummeted by 23 per cent since April 2 and over 42 per cent in the past six months.
However, the share price movements on August 1 are significantly less than the 22 per cent plunge the company experienced on April 2.