Will tariffs affect price of watches

[elau1958]

If the incoming Administrations keeps its promise and impose tariffs on imported goods, will Swiss watches fall into this category? If so, does that mean the MSRP will go up?

Will it be a good time to buy now to avoid price increase?

[77T]

Based on media reports back in November, it could be possible. https://www.reuters.com/markets/swis...ls-2024-11-19/

But that position might be changing since Pharma (Novartis & Roche), Chemicals, Specialized Scientific Equipment, and Swiss Chocolates are also impacted.

10% across the board might trigger Rolex USA to take action - but the mothership might split the difference with the importer for a mild 5% uplift to US MSRP.


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[BNA/LION]

Short answer is Yes.

[Moondoggy]

When I have to drop some $$$ whether it is $12,500 or $13,450 or ............who cares does it really matter once you cross the line you just commit, sure if it was like 30%+ increase I would think about it

[77T]

If it comes to pass, the price increase for service parts, tools, and collateral would hit Rolex owners harder than the sales price.

We get perhaps 20-25% of annual watch production - maybe 200,000 watches per year?

But 100% of the installed base of millions of watches need parts. So there's that...


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[S’portEye]

Yes

[Fleetlord]

Originally Posted by Moondoggy

When I have to drop some $$$ whether it is $12,500 or $13,450 or ............who cares does it really matter once you cross the line you just commit, sure if it was like 30%+ increase I would think about it

Agreed. Not a concern

[Xenophon]

I recall that the US used to have different rates of import tax on Swiss watches depending on the number of jewels in the movement. For a while in the 60s & 70s (I think) Rolex produced US versions of their models with less jewels than the European models. Tools (mod) verified this when I pointed it out before

[BraveBold]

Yes, if it comes to pass.

That said, IF it is implemented most buyers will be more concerned with the broader implications of elevated inflation and heightened recession risk rather than the price increase for Rolexes…

[enjoythemusic]

Originally Posted by elau1958

Will it be a good time to buy now to avoid price increase?

Price for goods and services is dependant on the currency's perceived value. This is why prices keep going up and up over the decades, so keep an eye on that as well. Obviously, if you want to lower numeric prices, buying sooner, even 30 or 20 or 10 years ago, was best versus prices today or the foreseeable future as the numeric price will (probably) never go down do to widely known factors concerning currencies.

Here's what AI has to say:

Prices tend to rise over time due to a phenomenon called inflation. Inflation is the rate at which the general level of prices for goods and services is rising, and subsequently, the purchasing power of currency is falling1. Several factors contribute to inflation:

Increased Production Costs: When the costs of raw materials, labor, or manufacturing rise, companies often pass these costs onto consumers in the form of higher prices.

Higher Demand: When more people want to buy goods and services than are available, prices can go up due to the increased competition for those items.

Supply Chain Disruptions: Issues in the supply chain, such as shortages of key materials or transportation delays, can lead to higher prices as companies struggle to meet demand.

Monetary Policies: Decisions by central banks, like lowering interest rates or increasing the money supply, can also contribute to inflation by making borrowing cheaper and increasing spending.

Fiscal Policies: Government spending and tax policies can influence inflation. For example, increased government spending can boost demand, leading to higher prices.

Inflation can erode the value of money, meaning that over time, the same amount of money buys fewer goods and services. This is why prices seem to keep going up when measured in dollars.

[BraveBold]

Well said AI.

AI also summarizes why some inflation is better than deflation (where money is “worth more” over time) and why economists view a small amount of inflation as the pragmatic optimal target. Proof is in the pudding too - countries and economies with modest inflation have outperformed economies with deflationary tendencies or with overly high inflation:

A moderate level of inflation is generally considered beneficial for an economy because it encourages spending and investment. Here’s why:
1. Encourages Consumption and Investment: With moderate inflation, people and businesses are more likely to spend and invest rather than hoard money, as holding onto cash means its value will decrease over time. This supports economic activity and growth.
2. Debt Relief: Inflation reduces the real value of debt over time, making it easier for borrowers (like governments, businesses, and individuals) to repay loans.
3. Wage Flexibility: It allows for gradual wage increases, making it easier for companies to adjust wages without needing sharp cuts or layoffs.
4. Avoids Deflation Risks: Deflation, or falling prices, can lead to a vicious cycle where consumers delay spending in anticipation of lower prices, causing demand to drop and further slowing economic activity. It can also increase the real burden of debt, leading to defaults and economic stagnation.

In contrast, too little inflation or deflation can signal weak demand and economic stagnation, causing unemployment and discouraging investment. Thus, moderate inflation strikes a balance between growth and stability.

[BraveBold]

Tariffs are “generally” bad, however. Generally of course doesn’t mean “always” but I think the majority of economists would agree with me that this is not an appropriate time for blanket tariffs.

So whether a good time to buy… does the risk of higher Rolex prices support more purchases today or does the risk that higher prices cause an eventual recession support waiting… personally, so long as purchases are relatively immaterial to your net worth, it shouldn’t be driven by these concerns. Rather the analysis I suggested earlier - is it worth more to YOU than what it costs? If yes, good time to buy

[brandrea]

Possibly.

Welcome to the new inflation

[1William]

We are a long way from this. Is it possible, sure. Is it probable, probably not. Most is a negotiation tool for other issues. We will see.

[BraveBold]

Originally Posted by 1William

We are a long way from this. Is it possible, sure. Is it probable, probably not. Most is a negotiation tool for other issues. We will see.

Agree that it could (should) be a negotiation starting position rather than a targeted outcome. As you say, we shall see.

[austinp]

Doesn’t Rolex already increase prices most years?


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[Krash]

Originally Posted by austinp

Doesn’t Rolex already increase prices most years?


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The price of a Submariner has gone from $8,500 to $9,100 since I bought one not that long ago. So I’d expect more price increases with or without tariffs.

Plus, Switzerland doesn’t seem to fit the profile for tariffs anyway. They don’t do anything that angers us.

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[Calatrava r]

I would expect a price increase from Rolex next year no matter what happens.

[330ci]

Originally Posted by Xenophon

I recall that the US used to have different rates of import tax on Swiss watches depending on the number of jewels in the movement. For a while in the 60s & 70s (I think) Rolex produced US versions of their models with less jewels than the European models. Tools (mod) verified this when I pointed it out before

There were lower jewel counts; as well as watches were sent disassembled as tariffs on parts were less than complete watches. Many bracelets were made in USA & Mexico during this period. Another factor was that Americans ownership of gold was restricted from 34-75 and that’s why US market Rolexes from the Era are made with 14kt where their European counterparts had 18kt on two tone and gold models.

[330ci]

Originally Posted by Krash

The price of a Submariner has gone from $8,500 to $9,100 since I bought one not that long ago. So I’d expect more price increases with or without tariffs.

Plus, Switzerland doesn’t seem to fit the profile for tariffs anyway. They don’t do anything that angers us.

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And the US doesn’t particularly have a strong watch industry.

In the grand scheme of things luxury goods should be hit with more taxes though.

People clearly don’t have a problem paying more than MSRP. Might as well drive down demand and benefit society in the process.

[330ci]

Originally Posted by Calatrava r

I would expect a price increase from Rolex next year no matter what happens.

The third certainty of life…

Death, taxes and Rolex price increases

[timepiececurator]

Prices in general will continue to increase but if we do see these tariffs I do believe we will see a steeper increase than normal

[enjoythemusic]

Originally Posted by Calatrava r

I would expect a price increase from Rolex next year no matter what happens.

Agreed, like death some things are impossible to change. Just wish the bottle of OJ wasn't now smaller in size and less juice while the price has doubled over time.

[piratfisk]

Originally Posted by Moondoggy

When I have to drop some $$$ whether it is $12,500 or $13,450 or ............who cares does it really matter once you cross the line you just commit, sure if it was like 30%+ increase I would think about it

Originally Posted by Fleetlord

Agreed. Not a concern

Hear, hear. In for a penny, in for a pound. If you really want the thing, you'll buy the thing.

[hambone1983]

what's the "benefit to society" that is accomplished by placing a tariff on luxury watches?

[77T]

There isn't an industry specific Swiss watch tariff. It's an overall 10% proposed tariff on all imported goods - so for any Swiss products, watches as well as chocolates, it's 10%.


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[Andad]

Are there watch manufacturers in the US that a tariff may benefit long term Rick?

[Krash]

So if we import approximately $3,500,000,000,000 worth of goods annually, a 10% tariff would amount to about $350,000,000,000 worth of revenue.

I’m not saying I’m for that, but I’m not sure why some people would be okay with raising taxes on US businesses from 21% to 28% (or higher), while at the same time, they are concerned about a 10% sales tax on foreign businesses, which is basically what a tariff is.


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[Moondoggy]

Honestly if and when and how it happens, tariffs on high end goods will amount to zilch in the big picture, like seriously it’s loose ie. left over money.

[Kinnakeet]

Originally Posted by Krash

So if we import approximately $3,500,000,000,000 worth of goods annually, a 10% tariff would amount to about $350,000,000,000 worth of revenue.

I’m not saying I’m for that, but I’m not sure why some people would be okay with raising taxes on US businesses from 21% to 28% (or higher), while at the same time, they are concerned about a 10% sales tax on foreign businesses, which is basically what a tariff is.


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Well I think we both know the answer to that.