Shares of Watches of Switzerland Group Plc fell as much as 6% after U.S. President Donald Trump announced a 39% tariff on imports from Switzerland — one of the steepest rates introduced so far in the escalating trade war.

The retailer, known for selling Rolex and other Swiss timepieces in the U.K. and U.S., has been hit hardest by the latest tariff measures. Financial markets in Switzerland were closed for a public holiday, initially sparing listed producers such as Richemont and Swatch Group AG from immediate share price reaction.

Swiss watch exports had already surged earlier this spring, as Trump threatened a 31% levy. Importers rushed to bring in inventory ahead of potential tariffs, before volumes eased in anticipation of a possible compromise.

If the 39% tariff proceeds, it could lead to U.S. retail price hikes of more than 20%, according to analysts at Jefferies led by James Grzinic. However, there remains a possibility that the measure won’t be implemented.

“The one-week hiatus until implementation suggests this could be a negotiating tactic,” Grzinic said in a note.

Swiss watch exports fell by nearly 10% in May, largely driven by a drop in shipments to the U.S.

“The rise of ‘luxury fatigue,’ a declining ‘feel-good factor’ from luxury purchases, and worsening consumer sentiment all contribute to a less optimistic outlook,” Vontobel analyst Jean-Philippe Bertschy wrote in a note last month.

News Credits- FASHION NETWORK