Tariff imposed and Watch Prices in the USA

[harvey]

Originally Posted by TikTok

So, how come this thread survived when many others didn’t?

…probably stopping numerous other threads being started discussing the same nonsense?

[enjoythemusic]

Originally Posted by JRell

My man - read the room.

Luxury mechanical timepieces room, enthusiasts, admirers, etc who appreciate "the state of great comfort and extravagant living".

Another definition of Luxury
"An inessential, desirable item which is expensive or difficult to obtain."

So yes, we may see more availability as 'weak hands' get shaken out of the LUXURY market. This recent news could reduce complaints we've seen here on TRF about waiting for availability.

Surely many here on TRF enjoyed the Sugar Rush of the recent bubble, we danced, we sang, we had a great time....... those were the days my friend.

[JRell]

Originally Posted by Dave O

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.

Difference is…this is self-imposed.

[codecow]

Originally Posted by enjoythemusic

Luxury mechanical timepieces room, enthusiasts, admirers, etc who appreciate "the state of great comfort and extravagant living".

Another definition of Luxury
"An inessential, desirable item which is expensive or difficult to obtain."

So yes, we may see more availability as 'weak hands' get shaken out of the LUXURY market. This recent news could reduce complaints we've seen here on TRF about waiting for availability.

Surely many here on TRF enjoyed the Sugar Rush of the recent bubble, we danced, we sang, we had a great time....... those were the days my friend.

Hot pieces can end up being Veblen goods, but perhaps not at the scale Rolex produces them. If they back off a bit on their hotter references and increase the price that could be a viable strategy. It somewhat seems like they’re attempting it with some of the new models.

[enjoythemusic]

Originally Posted by Michigan_State

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.

To equalize msrp country to country as much as possible, VAT/ import is considered. In the end a Rolex is just a luxury item, so rejoice in knowing higher cost could bring availability to many enthusiasts who desire and can afford.

Added PS: Let us also recognise there are some incredible timepieces in the $3k region, the market brands offer so very much... including the ease of $600 DIY via bits from Aliexpress. There's something for every budget

[Mystro]

Absolutely, we will be fine.

[gerry100]

Originally Posted by 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.

Agree.
Strictly using math on the AD cost, the assumed 65% cost will become 85% which is a major hit on the AD margins.
IMHO, Rolex will eat some of this and the AD some in a softening market for luxury goods.
List prices may increase but actual selling prices could be unaffected

[watchnoob]

Originally Posted by Dave O

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.

Not necessarily. During the great recession it took 3-4 years for indices to go back to per-recession values.

[logo]

Originally Posted by watchnoob

Not necessarily. During the great recession it took 3-4 years for indices to go back to per-recession values.

And >10 years for the Nasdaq to recover after 2000.

[Maleg]

I heard that in retaliation for US tariffs Rolex is cutting the US allocation by 31%.

[Paddydog52]

Originally Posted by Maleg

I heard that in retaliation for US tariffs Rolex is cutting the US allocation by 31%.

Which would mean that US buyers would look to Europe to buy instead which will presumably increase new and used prices in Europe, interesting times ahead for sure

[HiBoost]

Originally Posted by KenRose

This is absolutely not true. They are not "reciprocal" tariffs. That was just what Trump was calling them. Instead they are tariffs based on a misguided calculation related to trade deficit.

I'm glad to see somebody else saying this because most are just taking this "reciprocal" term as fact. I saw a breakdown this morning on the new 50% tariff we are imposing on the African country Lesotho. We bought $228M from them and they bought $7M from us. So this tariff is meant to right this horrible wrong. The only issue is they are a poor country of 2M people and we are a rich country of 340M people, so how are they supposed to spend as much as we do? At the very least scale the trade deficit in per-capita terms. But even then it falls way short in many cases. Using this same example, most of what we import from this country are diamonds. We don't have US diamond mines. So how exactly are we going to bring those jobs here? It just makes us look like idiots. For any country that is actually playing unfairly with us I'm all for dropping an economic bomb on them but can we at least come up with some sensical metrics?

[brandrea]

Originally Posted by HiBoost

I'm glad to see somebody else saying this because most are just taking this "reciprocal" term as fact. I saw a breakdown this morning on the new 50% tariff we are imposing on the African country Lesotho. We bought $228M from them and they bought $7M from us. So this tariff is meant to right this horrible wrong. The only issue is they are a poor country of 2M people and we are a rich country of 340M people, so how are they supposed to spend as much as we do? At the very least scale the trade deficit in per-capita terms. But even then it falls way short in many cases. Using this same example, most of what we import from this country are diamonds. We don't have US diamond mines. So how exactly are we going to bring those jobs here? It just makes us look like idiots. For any country that is actually playing unfairly with us I'm all for dropping an economic bomb on them but can we at least come up with some sensical metrics?

There’s a lot of “facts” out there that just aren’t

Carry on …

[brandrea]

Originally Posted by Paddydog52

Which would mean that US buyers would look to Europe to buy instead which will presumably increase new and used prices in Europe, interesting times ahead for sure

Except you’d still have to declare it through customs on return to the US …

[Maleg]

Originally Posted by HiBoost

I'm glad to see somebody else saying this because most are just taking this "reciprocal" term as fact. I saw a breakdown this morning on the new 50% tariff we are imposing on the African country Lesotho. We bought $228M from them and they bought $7M from us. So this tariff is meant to right this horrible wrong. The only issue is they are a poor country of 2M people and we are a rich country of 340M people, so how are they supposed to spend as much as we do? At the very least scale the trade deficit in per-capita terms. But even then it falls way short in many cases. Using this same example, most of what we import from this country are diamonds. We don't have US diamond mines. So how exactly are we going to bring those jobs here? It just makes us look like idiots. For any country that is actually playing unfairly with us I'm all for dropping an economic bomb on them but can we at least come up with some sensical metrics?

The Gentleman that enacted the tariffs has been a tariff enthusiast for many years. People that know him well speak of this philosophy as "in his bones".

One would think that anyone who had a deep belief in a particular economic action would have spent some time engineering the implementation of his philosophy. Yet, it appears this was drawn up un the back of a golf scorecard and the final implementation plan issued on a soiled cocktail napkin.

As you say, the rhetoric doesn't match the reality, at all.

[Maleg]

Originally Posted by brandrea

Except you’d still have to declare it through customs on return to the US …

I don't want to appear to endorse illicit actions, but it's unlikely that people will be enthusiastic about declaring a luxury watch purchase at 31% tariffs. I declared all the watches I purchased overseas, but the tax was tiny (~1%) and easy to justify as a sales tax. This is take your chances territory IMO.

[brandrea]

Originally Posted by Maleg

I don't want to appear to endorse illicit actions, but it's unlikely that people will be enthusiastic about declaring a luxury watch purchase at 31% tariffs. I declared all the watches I purchased overseas, but the tax was tiny (~1%) and easy to justify as a sales tax. This is take your chances territory IMO.

I certainly would think that now more than ever, there will be even closer scrutiny. Not a good idea IMHO


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[Maleg]

Originally Posted by brandrea

I certainly would think that now more than ever, there will be even closer scrutiny. Not a good idea IMHO


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I agree. But how would they increase scrutiny? Are they going to stop every travelor, inspect his wrist, and demand proof it was purchased in the US before he left the US? There is no technology or methodology that can increase scrutiny beyond what they do now.

In practice, people will lie when asked if they bought anything on their trip, then head through the green "nothing to declare" gate and out the door.

[brandrea]

Originally Posted by Maleg

I agree. But how would they increase scrutiny? Are they going to stop every travelor, inspect his wrist, and demand proof it was purchased in the US before he left the US? There is no technology or methodology that can increase scrutiny beyond what they do now.

In practice, people will lie when asked if they bought anything on their trip, then head through the green "nothing to declare" gate and out the door.

Ask enough questions and if you have a trained eye, you can generally tell if someone is lying me thinks

Hey, if you’ve got ice veins go for it there are plenty of stores of people who’ve been caught and the outcomes aren’t good.

I would think it would pay off to ask a nervous looking traveller coming from overseas if they have anything to declare …


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[Maleg]

Originally Posted by brandrea

Ask enough questions and if you have a trained eye, you can generally tell if someone is lying me thinks

Hey, if you’ve got ice veins go for it there are plenty of stores of people who’ve been caught and the outcomes aren’t good.

I would think it would pay off to ask a nervous looking traveller coming from overseas if they have anything to declare …


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I think their trained eye is looking for narco smugglers, not Rolex buyers. But who knows, they might think there's enough disgruntled watch buyers out there to divert security resources to watch wearers.

[brandrea]

Originally Posted by Maleg

I think their trained eye is looking for narco smugglers, not Rolex buyers. But who knows, they might think there's enough disgruntled watch buyers out there to divert security resources to watch wearers.

Uncle … you win, good luck!


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[TikTok]

Originally Posted by JRell

…..I told you so? Would love to hear it in different languages ….

Here you go in Maltese, Għidtlek hekk.

[Dr. Robert]

Originally Posted by TikTok

Here you go in Maltese, Għidtlek hekk.

Spanish
Te lo dije

French
Je te l’ai dit

Tagalog
Sinabi ko na sayo


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[Maleg]

Originally Posted by brandrea

Uncle … you win, good luck!


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I have no plans at the moment to buy anything new and tariffs won't apply to the gray market if I can't live without something.

[RaceDoc]

Absolutely true!

Originally Posted by Maleg

The Gentleman that enacted the tariffs has been a tariff enthusiast for many years. People that know him well speak of this philosophy as "in his bones".

One would think that anyone who had a deep belief in a particular economic action would have spent some time engineering the implementation of his philosophy. Yet, it appears this was drawn up un the back of a golf scorecard and the final implementation plan issued on a soiled cocktail napkin.

As you say, the rhetoric doesn't match the reality, at all.

[dankatz]

Originally Posted by bravebold

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

Have a tariffic day everyone!

this

[Calatrava r]

Originally Posted by Maleg

I have no plans at the moment to buy anything new and tariffs won't apply to the gray market if I can't live without something.

Actually, the impact, unknown at the moment, could be huge on the used market. Firstly, if new watch sales slow and they might or might not, that would mean less watches to be re-sold and therefore less supply to used watch dealers. If buyers shun the new market from ADs due to the higher prices and seek newish used watches, that will drive up demand of the used watches. So potentially, there is a combined lesser supply and increased demand, which could drive used watches prices a lot higher from here. And as always, the used watch dealers are well ahead of the curve and will price accordingly.

[Calatrava r]

Originally Posted by logo

And >10 years for the Nasdaq to recover after 2000.

Different situation there. Those tech companies were trading at 100 times unknown future earnings or more in cases. There was really no core value anywhere. When the frenzy stopped, companies which survived began to trade on real numbers. The YK2 disaster did not help. People were scared in to making all their foreseeable tech purchases before the century change and after that nobody needed anything for a good while. It took time for that demand/supply imbalance to stabilize enough to give the tech companies some forward looking visibility.

[logo]

Originally Posted by Calatrava r

Different situation there. Those tech companies were trading at 100 times unknown future earnings or more in cases. There was really no core value anywhere. When the frenzy stopped, companies which survived began to trade on real numbers. The YK2 disaster did not help. People were scared in to making all their foreseeable tech purchases before the century change and after that nobody needed anything for a good while. It took time for that demand/supply imbalance to stabilize enough to give the tech companies some forward looking visibility.

No doubt, my point was just that using the blanket assumption that stonks always go back up is not great financial advice.

[onnomon]

ultra-wealthy have already gone into the bond market. Let the equities fall, buy-low sell-high. win-win

watch demand: do you think the economic uncertainty will slump demand? Unless the average Rolex buyer is flush enough with wealth (didn't say "wealthy") we shall see new units bequeathed upon us. Let's keep an eye out in the next year. Be sure to publish your result in TRF with the "Surprise from my AD" type messages.