Tariff imposed and Watch Prices in the USA

[Tick Tock Tick Tock]

Originally Posted by enjoythemusic

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

VAT in the UK is 20%.

This is not absorbed by retailers, it is a tax levied by the HMRC, which is applied to the sale, collected by the retailer and then paid to HMRC.

There is no absorption.

[colonelpurple]

Relax, the tariff issue with most countries will be gone within 12 months as these countries agree with the US new trading rules.

What would worry me is that swiss watch produces love to increase prices, e.g for currency exchange, but then never decrease them when they go in the opposite direction. So the actually worry is that swiss watch producers will just use this as an excuse to hike prices permanently. the counterbalance to this is that everything in the market, even rolex, has a price people are willing to pay. The Rolex, and other swiss watch company's, price increases in the last few years has been disgusting. The market responds with discounts and the decrease in second hand value. It no surprise that apart form a few professional models, most Rolex's are selling lower then retail second hand. The trend will get sharper over the next few years.

[supernova]

Originally Posted by Tools

If you import the other direction, you may have a low initial tariff, but importers also pay any VAT in addition.

That is totally not true, VAT is 100% paid by the consumer, not the importer or merchant. And as others mentioned, it levied on all goods including domestic made and services.


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[Mick_Tock]

Surely there must be a small town somewhere in the US called Swiss. Rolex could then assemble their watches there and still print "Swiss Made" on the dial. Just my solution for getting round the tariffs.

[alllexandru]

Sweeping tariffs announced by President Trump hit a remote Australian territory with a 10% tariff, despite no people living there.

Reuters footage from 2012 shows part of the territory, Heard Island, mostly covered by ice and home to penguins.

Economic activity ended way back

From 1855 to 1882 a number of American sealers spent a year or more on the island, living in appalling conditions in dark smelly huts, also at Oil Barrel Point. At its peak the community consisted of 200 people. By 1877, sealers had wiped out most of the seal population and left the island. In all, the islands furnished more than 100,000 barrels of elephant seal oil during this period.[16]

A number of wrecks have occurred in the vicinity of the islands. There is also a discarded building left from John Heard's sealing station that is situated near Atlas Cove


____________

We talk again in 6-9 months and see how this topic will age, I dont think we are going in the direction of clear waters

[mongrelnomoad]

Originally Posted by Tick Tock Tick Tock

VAT in the UK is 20%.

This is not absorbed by retailers, it is a tax levied by the HMRC, which is applied to the sale, collected by the retailer and then paid to HMRC.

There is no absorption.

I just think the Americans in this thread are throwing around the term VAT without any understanding as to what it is.

I'll give my best shot at an explanation:

VAT (Value Added Tax) is simply a sales tax. It is applied across the board and levied on everything, irrespective of what, and irrespective of origin. HMRC (His Majesty's Revenue and Customs) collects the VAT uplift after the sale.

It is generally quoted within the stated price (unless on a trade invoice) simply because it's harmonised (at 20% in the UK) whereas Americans have different sales tax levies in different states.

You know how in the USA anything you buy is $x + tax? VAT is just the + tax.

[cyind]

Originally Posted by Mick_Tock

Surely there must be a small town somewhere in the US called Swiss. Rolex could then assemble their watches there and still print "Swiss Made" on the dial. Just my solution for getting round the tariffs.

This a good idea!

[Xenophon]

I recall that the US used to impose import duty on watches based on the number of jewels in the movement. This prompted Rolex (amoung others) to produce movements with fewer jewels for the US market.
There was a thread on here about it https://www.rolexforums.com/showthread.php?t=784134

Import duty/tarriff what's the difference ?

[EverCloserUnion]

Originally Posted by Xenophon

I recall that the US used to impose import duty on watches based on the number of jewels in the movement. This prompted Rolex (amoung others) to produce movements with fewer jewels for the US market

Those categories still exist, although the actual MFN rate is in virtually all cases I've seen a 0% duty.

The list of wrist-watch categories is surprisingly long.

[RolexAwaytheDew]

Lots of talk about the mechanics of price changes with the addition of tariffs, but the real elephant in the room is what will be the effect the tariffs have on the demand for Rolex watches? I am suddenly feeling a lot less financially secure. Six months ago, “sure I will add another $10,000 watch”. Today, “$5000 for another watch, are you kidding me?”

[Rolexatlast]

I would be interested to know what proportion of production goes to the US.

However, whatever it is, I’m sure Rolex will be able to compensate for any decrease in demand in the US by diverting stock to the rest of the world

[Rolexatlast]

Originally Posted by Miker86

The mental gymnastics to position rising prices as a good thing is impressive.

I’ve seen plenty of threads on here claiming that the grey market sucking up in demand models and selling them onto the public at much higher prices is a good thing

[JRell]

Originally Posted by RolexAwaytheDew

Lots of talk about the mechanics of price changes with the addition of tariffs, but the real elephant in the room is what will be the effect the tariffs have on the demand for Rolex watches? I am suddenly feeling a lot less financially secure. Six months ago, “sure I will add another $10,000 watch”. Today, “$5000 for another watch, are you kidding me?”

Yes and check out your retirement portfolio from yesterday to today. This is so much bigger than the price of a Rolex. How do you tell someone I told you so without saying I told you so? Would love to hear it in different languages as this policy is going to impact the globe.

[Mr Ben]

Originally Posted by Rolexatlast

I would be interested to know what proportion of production goes to the US.

However, whatever it is, I’m sure Rolex will be able to compensate for any decrease in demand in the US by diverting stock to the rest of the world

I wondered the same myself. There’s no numbers available as you’d expect but seeing as this seems to be a good week to just make up numbers, I’ll have a go.

The US apparently accounts for about 17% of Swiss watch exports by value and has 19% of Rolex AD’s. So I’d guess somewhere just under 20% might be in the right ballpark.

And yeah, if you sent 25% more watches to my AD, they’d get sold no problem so despite being its largest market, Rolex doesn’t even need the US. It’s hard to see any reason for them not to just pass the costs on in full (to answer the original question in the post.)

[Giangos]

Originally Posted by mannyv11

No tariffs on Russia or North Korea though. North Korea I get we don’t do anything with them but Russia is interesting…..

There is a trade embargo with Russia.
So no sense in taxing something that doesn’t exist.
Same with North Korea.


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[mountainjogger]

Personally, I think most of the views expressed on this subject are way too simplistic and that there are no guarantees about where this going and what the final effect will be. However, I do agree wholeheartedly with this,

Originally Posted by JRell

This is so much bigger than the price of a Rolex.

[Brenngun]

Originally Posted by JRell

Yes and check out your retirement portfolio from yesterday to today. This is so much bigger than the price of a Rolex.

I watched an interview yesterday with a UAW president who said he supported the tariffs. He said the media was focusing too much on the market decline and that it didn't matter because most UAW members don't buy and sell stocks. The interviewer missed the obvious question. "Do any of your members have 401K's"?

[enjoythemusic]

Woo-hoo, this could bring more availability at the AD.

Sweeet!

This could shorten the waiting list.

[JRell]

Originally Posted by enjoythemusic

Woo-hoo, this could bring more availability at the AD.

Sweeet!

This could shorten the waiting list.

My man - read the room.

[Maleg]

Originally Posted by Brenngun

I watched an interview yesterday with a UAW president who said he supported the tariffs. He said the media was focusing too much on the market decline and that it didn't matter because most UAW members don't buy and sell stocks. The interviewer missed the obvious question. "Do any of your members have 401K's"?

More to the point, about half the UAW pension fund is in the stock market. Statements like that illustrate how detached some of these "leaders" are from reality.

[tuantuanbo]

https://youtu.be/ntqiPZXt5sw

[harvey]

…first I’ve heard of this?!

[brandrea]

Originally Posted by harvey

…first I’ve heard of this?!

[scarlet knight]

Originally Posted by Mick_Tock

Surely there must be a small town somewhere in the US called Swiss. Rolex could then assemble their watches there and still print "Swiss Made" on the dial. Just my solution for getting round the tariffs.

No one will notice.

[HiBoost]

Originally Posted by Tools

What I meant here is that the Geneva cost to import, in bulk, to Rolex USA is nowhere near the MSRP of a Rolex by the time it gets to a Dealer, it is a small fraction of that price and also not in addition to any already levied tariff.

A 12,000 dollar watch from a Dealer may likely only have had 3,000 dollars that was its tariff declared value to import.

So, thinking that your watch will jump by 31% retail, at the Dealer, is way, way off.

But of course the counterpoint to this is the 11% increase in MSRP Rolex USA applied to gold models in January. We all know that a gold watch was already significantly overpriced relative to its actual gold content. And yet rising gold prices resulted in a direct increase to customers. Without question this could have been absorbed by the company but it was not.

[brandrea]

Originally Posted by JRell

My man - read the room.

I think he’s being facetious

You’re right though … we are set for another soft open in the market.

I’m using this as an opportunity to buy good companies on sale, but I certainly understand the uncertainty this whole situation is causing.

Hope you are well

[Dave O]

Originally Posted by JRell

Yes and check out your retirement portfolio from yesterday to today. This is so much bigger than the price of a Rolex. How do you tell someone I told you so without saying I told you so? Would love to hear it in different languages as this policy is going to impact the globe.

No different than the plunge when covid hit. I lost over $1m during that time, but then got it all back and then some over the next few years. It's my opinion it'll be the same in this case. Stocks will lose a lot, but then come roaring back as they typically do. Just need to hang tight for the ride.

[TBC123]

The short of it is prices will go up in the US. By how much we will soon learn. If market demand in the US cannot sustain this increase, Rolex will divert inventory to other markets where universally supply still lags demand. They may also mothball or slow down any new factory capacity coming on line.

[OG1982]

Really, who knew?

[Got Rolex?]

Originally Posted by Dhiren



•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,

Yes, but don't forget the state sales tax increase on that $3,100 might also be added.

Rolex limits what the ADs get. That is to say, you can't really 'order' the Rolex you want; you just kind of have to wait until one comes in and hope no one else is in line before you. The irony is that now the ADs will have the inventory, but fewer will want to pay the added cost. Not sure if I'll be able to get that GMT II Black and Grey