Luxury brands Burberry and Watches of Switzerland see shares plummet after Trump tariffs

Today witnessed a downturn in the share prices of luxury retailers Watches of Switzerland and Burberry following President Trump's announcement of new tariffs.

Shares of Watches of Switzerland plunged by over 15 percent, while those of Burberry decreased by almost seven percent, as reported by City AM.

Kathleen Brooks, research director at XTB, commented on the situation, saying, "Investors are still seeking out areas of safety, including utilities, real estate, healthcare and consumer staples."

About one quarter of UK luxury exports head to North America, with most of that trade taking place with the US, as highlighted by Walpole, an industry association.

Analysts from RBC predict a significant "elevated tariff impact" for Burberry due to its diverse sourcing mix — the varied combination of countries and suppliers that produce its merchandise.

Burberry collaborates with an international network of suppliers, operating an outerwear factory in Italy and a scarf production facility in Scotland, with goods made in Italy being subject to a 20 percent US import duty.

America represents approximately 20 percent of Burberry's sales, and was the only region showing sales growth in the brand’s most recent quarterly report—a crucial element for Burberry's rejuvenation strategy.

On the other hand, Watches of Switzerland experienced a sharp fall in its share value partly because Swiss imports into the United States will face an additional tariff of 31 percent.

Switzerland was highlighted by Trump as one of the major offenders in unfair trade practices with America. Last year, the US recorded a CHF 38.5bn (£33.9bn) trade deficit with the European country.

RBC analysts also noted that the watch company has slimmer margins compared to its rivals, making it harder to react to tariffs.

"[In response] companies can either raise prices, change country of origin (to the extent possible), renegotiate supplier terms... or absorb tariff costs."