Tariff imposed and Watch Prices in the USA

[Dhiren]

Interesting developments

The U.S. government’s recent decision to impose a 31% tariff on Swiss imports, including watches, is poised to significantly impact both the U.S. market and global watch availability. 

Impact on U.S. Watch Prices and the Grey Market:
•Increased Retail Prices: Importers and retailers may pass the tariff costs onto consumers, leading to higher prices for Swiss watches in the U.S. For instance, a $10,000 watch could see its price rise to $13,100, reflecting the added tariff burden. 
•Expansion of the Grey Market: Elevated retail prices might drive consumers toward the grey market, where watches are often sold at discounted rates. This shift could lead to an influx of Swiss watches in the grey market, potentially undermining official retail pricing and affecting authorized dealers’ sales. 

Effect on Global Availability of Sought-After Watches:
•Diversion of Supply: With the U.S. market becoming less accessible due to higher prices, excess inventory may be redirected to other regions, potentially saturating markets that were previously balanced.
•Price Fluctuations: An influx of watches into markets like India and Mexico, which have shown significant growth in Swiss watch imports, could lead to price adjustments. For example, India experienced a 25% increase in Swiss watch imports in 2024, indicating a trend that might be influenced by global supply shifts. 
•Impact on the Grey Market Worldwide: As official channels face higher prices, the global grey market for Swiss watches could expand, offering discounted prices but potentially affecting brand value perceptions and after-sales support.

In summary, the new U.S. tariff on Swiss watches is likely to lead to higher retail prices in the U.S., potentially boosting grey market activities. This shift could disrupt traditional pricing structures and affect the availability of sought-after watches across global markets.


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[harvey]

Watches of Switzerland share price down 14% today.

[Onami]

Tarrifs are applied to the wholesale transfer price - not the retail selling price.

[alllexandru]

Originally Posted by Onami

Tarrifs are applied to the wholesale transfer price - not the retail selling price.

Yes, you imported with 1 and resale was 1.5
Now you will import with 1+ 0.31 total of 1.31 and you will not gonna sell for the same 1.5 because your operațional margin has to cover the expenseses and profit
So the retail will increase also maybe not with 31% but with a big part of it.
No one is doing charity these days, consumers will pay the difference
Short term and long term it is not sustainable because inflation etc but maybe Rolex will open a factory in us then you will be safe

Very interesting the calculation method used to blow these tariffs in front of the consumers

Matching countries’ tariffs dollar for dollar is an incredibly difficult task, involving poring over each country’s tariff schedule and matching a complex array of products, each of which has a different charge for any variants.

Instead, the government seems to have used quite a simple calculation: the country’s trade deficit divided by its exports to the United States times 1/2. That’s it.

[Ferrari308]

At the same time, you have to recognize that tariffs are imposed heavily on any US made products that are exported. The US has applied no tariffs on anything in the post WW2 era. So, we in the US have allowed this for nearly 80 years.

The US is only doing reciprocal tariffs. This means that if any country is charging tariffs on our goods (which is almost anything & everything that we export), then we will apply the same tariffs on goods from that country.

It's intending to turn the market into a true FREE market and have the US companies have a level playing field with foreign markets.

You might notice that Canada has agreed to eliminate all tariffs with the US rather than to have to charge them. That came pretty quickly. Who is going to be next to drop their tariffs against the US? I am genuinely curious.


PDG

[brandrea]

So many threads on this topic …

[Duke Nukem]

Originally Posted by brandrea

So many threads on this topic …

Well, that's because they keep getting deleted and lot of the folks don't catch them in time.

[Lol-x]

Tariffs are just taxes and barriers to entry of imports, but they were applied by foreign countries first to the USA.

So maybe reciprocal tariffs will be a basis for negotiation, that's all it is to level the playing field and make all sides mutually resolve them.

University B.Ec. (1984)

[hojlund]

Originally Posted by Ferrari308

At the same time, you have to recognize that tariffs are imposed heavily on any US made products that are exported. The US has applied no tariffs on anything in the post WW2 era. So, we in the US have allowed this for nearly 80 years.

The US is only doing reciprocal tariffs. This means that if any country is charging tariffs on our goods (which is almost anything & everything that we export), then we will apply the same tariffs on goods from that country.

It's intending to turn the market into a true FREE market and have the US companies have a level playing field with foreign markets.

You might notice that Canada has agreed to eliminate all tariffs with the US rather than to have to charge them. That came pretty quickly. Who is going to be next to drop their tariffs against the US? I am genuinely curious.


PDG

no one will.

[DLRIDES]

Originally Posted by Ferrari308

At the same time, you have to recognize that tariffs are imposed heavily on any US made products that are exported. The US has applied no tariffs on anything in the post WW2 era. So, we in the US have allowed this for nearly 80 years.

The US is only doing reciprocal tariffs. This means that if any country is charging tariffs on our goods (which is almost anything & everything that we export), then we will apply the same tariffs on goods from that country.

It's intending to turn the market into a true FREE market and have the US companies have a level playing field with foreign markets.

You might notice that Canada has agreed to eliminate all tariffs with the US rather than to have to charge them. That came pretty quickly. Who is going to be next to drop their tariffs against the US? I am genuinely curious.


PDG

/\ This /\

[Ursusarctos]

Tariffs ultimately cause inflation and Rolex won't be immune. The US has a large trade deficit with Switzerland: #1 is pharmaceuticals, #2 is precious stones, pearls, precious metals, and in 3rd spot "watches". Rolex can shift product to other markets if needed: there's a global demand. In the US, there are many wealthy people that will step up with the extra cash and pay the tariff to get the watch they want from an AD.

[brandrea]

Originally Posted by Ferrari308

At the same time, you have to recognize that tariffs are imposed heavily on any US made products that are exported. The US has applied no tariffs on anything in the post WW2 era. So, we in the US have allowed this for nearly 80 years.

The US is only doing reciprocal tariffs. This means that if any country is charging tariffs on our goods (which is almost anything & everything that we export), then we will apply the same tariffs on goods from that country.

It's intending to turn the market into a true FREE market and have the US companies have a level playing field with foreign markets.

You might notice that Canada has agreed to eliminate all tariffs with the US rather than to have to charge them. That came pretty quickly. Who is going to be next to drop their tariffs against the US? I am genuinely curious.


PDG

I believe the book is still open on that one.

WCS oil is sold at a discounted price to the US.

If you strip out oil, the US would run a trade surplus with Canada.

My comments here are not intended to be political but rather to provide facts.

[watchnoob]

Originally Posted by Ferrari308

At the same time, you have to recognize that tariffs are imposed heavily on any US made products that are exported. The US has applied no tariffs on anything in the post WW2 era. So, we in the US have allowed this for nearly 80 years.

The US is only doing reciprocal tariffs. This means that if any country is charging tariffs on our goods (which is almost anything & everything that we export), then we will apply the same tariffs on goods from that country.

It's intending to turn the market into a true FREE market and have the US companies have a level playing field with foreign markets.

You might notice that Canada has agreed to eliminate all tariffs with the US rather than to have to charge them. That came pretty quickly. Who is going to be next to drop their tariffs against the US? I am genuinely curious.


PDG

LOL - you've been listening to the political soundbites too much from Fox News. Switzerland actually has low tariffs. The 60+% number is based on the trade deficit-not the tariffs. I encourage you to dig deeper into the data/studies, instead of relying on political soundbites from the administration/Fox news.

[Onami]

[QUOTE=

You might notice that Canada has agreed to eliminate all tariffs with the US rather than to have to charge them. That came pretty quickly. Who is going to be next to drop their tariffs against the US? I am genuinely curious.


LOL! Canada hasn't agreed to eliminating tariffs based on these latest actions. In fact, we have implemented counter-tariffs and are preparing to implement more. And yes, I live in Canada.

[joli160]

In my country we import more from the US than we export.
We should get a deduction on tariffs but instead we are hit with a 20% charge

[BraveBold]

I’ve learned my lesson not to wade into economics discussions with non-economists.

Have a tariffic day everyone!

[Mike G]

Impact on Watch Prices:

The immediate effect of this 31% tariff will be an increase in the cost of importing Swiss watches into the United States. However, the extent to which this cost is passed on to the consumer and the exact timing of price changes at the retail level are subject to several factors:  

Importer Decisions: The American companies that import Swiss watches will face a 31% increase in their costs. They will need to decide whether to absorb some or all of this cost, or pass it on to retailers through higher wholesale prices.  
Retailer Strategies: Retailers, in turn, will decide whether to absorb the increased wholesale costs, maintain their profit margins by raising prices for consumers, or a combination of both.
Brand Strategies: Some major Swiss watch brands set global retail prices. They might adjust their pricing strategies worldwide to account for the US tariff, potentially leading to price increases not only in the US but also in other markets to mitigate price discrepancies.  
Market Demand: The elasticity of demand for Swiss watches in the US market will play a role. If demand remains strong despite price increases, retailers may be more likely to pass on the full cost of the tariff. However, if demand weakens significantly, they might absorb more of the cost to maintain sales volume.
Inventory Levels: Retailers with existing inventory purchased before the tariff went into effect might delay price increases until their older stock is depleted. This could lead to a gradual increase in prices over time.
Secondary Market: The prices in the secondary market for Swiss watches are also likely to be affected, potentially with a delay. Increased prices for new watches could lead to higher demand and prices for pre-owned models, but this will also depend on overall market sentiment and supply.
Likely Outcomes and Timing:

Immediate Impact: It is highly probable that the prices of Swiss watches in US boutiques and authorized dealers will begin to increase shortly after the implementation of the tariff on April 3, 2025.
Magnitude of Increase: It is unlikely that the retail price will increase by the full 31%. The increase will likely be less, as importers, distributors, and retailers may absorb some of the cost. Some estimates suggest potential price increases in the range of 15% if half the wholesale cost is passed to consumers, or even lower if the cost is further absorbed along the supply chain.
Global Price Adjustments: Major brands might implement smaller price increases globally to minimize significant price differences between the US and other markets. This could mean that consumers outside the US might also see a slight increase in the price of Swiss watches.
Long-Term Effects: If the tariff remains in place, it could lead to a longer-term shift in consumer behavior, with some US buyers potentially looking to purchase watches in other countries with lower or no tariffs. It could also incentivize the development of watchmaking capacity in the US, although this is considered unlikely in the short to medium term given the specialized nature of Swiss watch manufacturing.
In summary, expect to see prices for Swiss watches in the US begin to rise in the immediate future following the implementation of the 31% tariff on April 3, 2025. The exact amount of the increase will depend on various market factors and the decisions made by importers, retailers, and the watch brands themselves. It is also possible that global pricing adjustments will occur to mitigate price discrepancies.

[cyind]

What’s with all the ChatGPT in this thread.

[erling]

Originally Posted by Duke Nukem

Well, that's because they keep getting deleted and lot of the folks don't catch them in time.

[Tools]

Originally Posted by Dhiren

Interesting developments

. . .

In summary, the new U.S. tariff on Swiss watches is likely to lead to higher retail prices in the U.S., potentially boosting grey market activities. This shift could disrupt traditional pricing structures and affect the availability of sought-after watches across global markets.


Sent from my iPhone using Tapatalk

Rolex watches were already subject to a tariff, they were not coming into the country for free. Even if you bought one out of country, when you bring it in you have to pay Duty/tariff fees.

31%, if it actually sticks, is just a few percentage points above where they were already at, so to be competitive a company can reduce their "profit" by a couple of percent, as well as the retailer, and costs remain the same to the end user.

To think that tariffs are new is fear mongering, everybody everywhere pays a fee/duty/tax on goodss they import into a country.

All that has been said is that Switzerland charges an average of 61% tariff for US imports into Switzerland, so the US will impose 31% on Swiss imports unless there can be a reciprocal trade agreement made that is more balanced..

The Grey Market will not be more attractive, they would pay any tariff as well. If anything, rising prices will make the AD more attractive with increased inventory and prices lower than the Grey Market currently sells for.

[erling]

Originally Posted by watchnoob

LOL - you've been listening to the political soundbites too much from Fox News. Switzerland actually has low tariffs. The 60+% number is based on the trade deficit-not the tariffs. I encourage you to dig deeper into the data/studies, instead of relying on political soundbites from the administration/Fox news.

[Maleg]

Originally Posted by Ferrari308

At the same time, you have to recognize that tariffs are imposed heavily on any US made products that are exported. The US has applied no tariffs on anything in the post WW2 era. So, we in the US have allowed this for nearly 80 years.

The US is only doing reciprocal tariffs. This means that if any country is charging tariffs on our goods (which is almost anything & everything that we export), then we will apply the same tariffs on goods from that country.

It's intending to turn the market into a true FREE market and have the US companies have a level playing field with foreign markets.

You might notice that Canada has agreed to eliminate all tariffs with the US rather than to have to charge them. That came pretty quickly. Who is going to be next to drop their tariffs against the US? I am genuinely curious.


PDG

Interesting argument.

Realistically, the US never imposed reciprocal tariffs because we like our citizens to be able to buy cheap goods. John Q Public US resident benefits directly by not paying high import taxes on every thing he buys. Low tariffs fuel the consumer economy.

US manufacturing moved overseas to avoid regulatory impacts and higher labor costs. But we still have affordable goods because we don't tax the bejesus out of everything that imports to us from everywhere we exported manufacturing. We don't really care about a trade deficit as long as we can buy cheap goods and stretch our dollar further.

Now we'll add a layer of new taxes universally across the board instead of targeting individual sectors that need strategic help to compete globally. How will that work out? It's a regressive tax. It will work out badly for the center of the bell curve, which will reflect in a sea change in 2026.

[Roger Lococco]

Originally Posted by Ferrari308

At the same time, you have to recognize that tariffs are imposed heavily on any US made products that are exported. The US has applied no tariffs on anything in the post WW2 era. So, we in the US have allowed this for nearly 80 years.

The US is only doing reciprocal tariffs. This means that if any country is charging tariffs on our goods (which is almost anything & everything that we export), then we will apply the same tariffs on goods from that country.

It's intending to turn the market into a true FREE market and have the US companies have a level playing field with foreign markets.

You might notice that Canada has agreed to eliminate all tariffs with the US rather than to have to charge them. That came pretty quickly. Who is going to be next to drop their tariffs against the US? I am genuinely curious.


PDG

One issue is that the tariffs are not actually reciprocal.


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[zjd168]

To the lucky few who can purchase the desired models at retails yes probably they will see the increase. For others who purchase through the grey market, or today's heavily discounted models from ADs, the difference would likely be insignificant. Luxury watches are discretionary items, their profit margins are generally high, and they can't just increase the price, otherwise people will just select not buying.

[enjoythemusic]

Don't manufacturers 'absorb' VAT in Europe, is it 12% or 17% nowadays?

[123Blueface]

Ibtl

[Seddyspaghetti]

Ibtl

[Rudiologe]

Originally Posted by Ferrari308

At the same time, you have to recognize that tariffs are imposed heavily on any US made products that are exported. The US has applied no tariffs on anything in the post WW2 era. So, we in the US have allowed this for nearly 80 years.

The US is only doing reciprocal tariffs.


PDG

That is untrue, where did you get this from? The amount of tarifs up until today was actually calculated. If you take the EU as an example, it has charged goods imported from the US with 2,5 percent tarifs on average. The US charged goods imported from the EU with 2 percent on average. So yes, there is a slight difference, but that is to be expected with complex matters like this. Both the US and the EU profited greatly from this. At least up until now.

[Michigan_State]

Originally Posted by enjoythemusic

Don't manufacturers 'absorb' VAT in Europe, is it 12% or 17% nowadays?

How do you mean? Taxes in general have the potential to distort the quote-unquote perfect market price. This is not exclusive to Europe. Other than that, VAT varies from country to country.

[fflump]

Originally Posted by Lol-x

Tariffs are just taxes and barriers to entry of imports, but they were applied by foreign countries first to the USA.

So maybe reciprocal tariffs will be a basis for negotiation, that's all it is to level the playing field and make all sides mutually resolve them.

University B.Ec. (1984)

The reciprocal tariffs argument is bogus. Trump calculated this “tariff” based on the US trade deficit with that country! So he claims eg China levy 64% on US goods which is totally fictional