How to undo pressing Don't Trust on Apple Watch
I got the same message on my Apple Watch and responded "Don't Trust" since I had no idea what computer was trying to connect. Then I read this article so opened the Console app on my Mac. Initially it didn't show my Apple Watch under Devices. I think I had to connect my iPhone to my computer first before both my iPhone and Apple Watch showed up, the latter with an exclamation icon due to the "Don't Trust" response.
I disconnected my iPhone from my computer and restarted the iPhone. I then reconnected it to my computer to check the status in Console again. I got the "Trust this computer" prompt on my Apple Watch again. After responding "Trust" this time and entering my PIN, the warning icon disappeared in Console after a few moments.
It should be noted that there may be delays before the Apple Watch shows up in Console. I think opening Xcode seems to hasten the discovery process but I'm not sure. Also, I have yet to see any Apple Watch log entries in Console.
Unfortunately this is documented nowhere on Apple support documents so I wish you good luck in figuring this out.
There is an open Apple Community Forum discussion on this topic which you might want to contribute to and/or vote as of interest (https://discussions.apple.com/message/33472303) but given how rarely Apple employees actually contribute to these forums with official answers I would not hold my breath until an acceptable answer is posted for it.
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Shutdown Xcode.
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Disconnect iPhone from laptop
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Power down iPhone.
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Power down Apple Watch (press and hold crown and side button for about 10s)
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Restart iPhone
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Restart Apple Watch (press and release crown, Apple logo should appear)
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Start up Xcode. Don't open your project just yet.
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Attach phone to laptop
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Xcode -> Windows -> Devices & Simulators
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There should be a banner across the top of the D&S window indicating that the phone and/or phone and watch is/are getting ready for development. Wait for that to complete.
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When complete, open your project and run on the watch.