Steady demand for luxury watches in the face of Trump’s tariffs has reassured investors this summer, but analysts have warned that it might not last if prices rise.
On Wednesday morning, Watches of Switzerland Group told markets that demand for timepieces has been “consistently strong” over summer, sending its share price up eight per cent.
US President Donald Trump imposed a 39 per cent tariff on imports from Switzerland, sending WOSG’s share price tumbling as investors feared the effect on American demand. US demand accounts for around 45 per cent of its revenue.
But WOSG told markets this morning trading has been “particularly good” in the US, “despite the announcement of increased tariffs on Swiss imports”.
The company does not anticipate any material impact from the US tariffs in the first half of the 2026 financial year, largely due to brand partners increasing inventories.
Swatch, too, recently told investors that it was ready to implement a five to 10 per cent price increase in the US to protect its margins, and said it had seen little impact on demand from price increases enacted earlier in the year.
‘What happens when prices rise?’
Analysts have floated concerns that retailers are selling watches that were imported at the lower tariff rates, which has allowed them to put off the inevitable price prices.
“Part of the reason there is no tariff impact on [WOSG’s] North American business, which continues to tick along, is that brand partners stocked up ahead of import levies taking effect,” AJ Bell analyst Russ Mould said.
Exports to the US shot up by 45 per cent in July, according to the Federation of the Swiss Watch Industry (FH), which the federation attributed to local sellers building up stock.
But chief executive of WOSG, Brian Duffy, said that “the general mood in Switzerland is that the situation will improve from what it is today” in a Bloomberg TV interview, adding that brands’ front-loaded inventory will buy time.
Mould, however, said that the “key test” is what happens to demand when tariffs start to feed into higher selling prices.
RBC analysts have pointed out that WOSG has lower margins than competitors, making it more difficult to respond to tariffs.
The group will have to “hope the strength of the brands it stocks means any impact [of higher prices] is limited,” Mould said.