Tariff imposed and Watch Prices in the USA

[BraveBold]

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.

True but we need to deconstruct the modern tech companies and their valuations.

There appear large slices of value ascribed (within megacap tech and standalone) to future, highly speculative growth. Consider Tesla as a company that exemplifies this today. Existing large, profitable business… but the vast majority of value doesn’t align to existing business (which is currently zero growth with declining margins).

We also know from 2021 that retail buyers are willing to speculate as much as any past generation. The Nasdaq 100 today is at the same level as about 4 years ago. Pockets looked like the old tech bubble… ARKK (perhaps the worst managed fund of all time, run by Tesla and crypto bull Cathie Wood) is at the same level today as approximately 8 years.

I don’t disagree with you but we also need to recognize there is a lot of embedded risk that looks eerily similar to the hopes and dreams based valuations of that past era…

[BraveBold]

Originally Posted by 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.

Rolex is also at greater risk than other brands (eg JLC, IWC). This is “relative”… because those brands likely have wealthier customers on average.

Again, relative consideration. All will be under pressure.

[JRell]

Originally Posted by TikTok

Here you go in Maltese, Għidtlek hekk.

Grazzi!

[BraveBold]

Originally Posted by Calatrava r

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.

Two primary opposing forces:

1) cross shopped / compared new vs used —> this will drive used watches higher
2) general negative economic impacts —> drive values down

Other aspects will be secondary or derivative compared to those. Likely an “up, then down, then up” movement. Time frame is impossible to know.

[JRell]

Originally Posted by Dr. Robert

Spanish
Te lo dije

French
Je te l’ai dit

Tagalog
Sinabi ko na sayo


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gracias, merci, salamat po

[DoricSpiker]

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.

I think the box and papers in your suitcase is the give away!


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[Beto737]

Originally Posted by BraveBold

Rolex is also at greater risk than other brands (eg JLC, IWC). This is “relative”… because those brands likely have wealthier customers on average.

Again, relative consideration. All will be under pressure.

Hmmmmm…..I respectfully disagree with you here. Those brands have struggled selling out a good portion of their products. Why? Because their watches lose quite a bit of value in the preowned market.

Rolex by definition is the best watch brand to get “most” of your money back if you decide to sell/trade. In my opinion, they are probably the best set up brand to weather this climate. They can scale production back in the middle of the night and not have to be accountable to anyone! No shareholders, no stock market, no shark loaners, no jerky knee selling, no buying lows, nothing..

And, their watches are still the best status symbols for the masses. Add to that the AD network they’ve shrunk, and now also own and control. They have almost all the levers available to them. Even if the world went down to nothing but oligarchs running the world, they’d still be ok. Hey, oligarchs like Rolex watches too!!

Just my opinion, I’ll shut up and color now…

[enjoythemusic]

AI says.... The idea that "the cure for high prices is high prices" suggests that when prices rise to a point where demand drops significantly, this can lead to a surplus of goods, eventually causing prices to fall as businesses adjust to lower sales.

Here's a more detailed explanation......

The Principle of Supply and Demand:
The core economic principle at play here is supply and demand. When prices are high, consumers tend to buy less, leading to a surplus of goods.


Businesses Respond to Demand:
Businesses, in turn, react to this reduced demand. They may lower prices, reduce production, or even stop producing certain goods altogether.

The Cycle of Adjustment:
This shift in supply and demand creates a cycle. Initially, high prices lead to reduced demand, which then leads to lower prices, potentially correcting the initial high-price situation.

Examples:
Think of a popular product that suddenly becomes very expensive. Consumers might switch to cheaper alternatives or wait for the price to come down. This reduced demand can force the price of the original product to fall.

[fishingbear]

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)

This.

[Cambo]

My wife and I are headed for a week vacation in Arizona. I have photos (time dated) of the watches I’m bringing down (and returning with).
Crazy times.
I refuse to get caught up in all this boycott this and boycott that nonsense. I have too many American friends that I will continue to enjoy visiting (and them with us). I just hope the TSA and CBS stay amicable.

[BraveBold]

:-)

[Paddydog52]

Originally Posted by Calatrava r

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.

So something has come along to push new and used prices across the world back up to peak pandemic levels, I always thought it would need to be something major to see those levels again so soon, the only headache you will have is when is the top before the turn again downwards.

[BraveBold]

Originally Posted by Beto737

Hmmmmm…..I respectfully disagree with you here. Those brands have struggled selling out a good portion of their products. Why? Because their watches lose quite a bit of value in the preowned market.

Rolex by definition is the best watch brand to get “most” of your money back if you decide to sell/trade. In my opinion, they are probably the best set up brand to weather this climate. They can scale production back in the middle of the night and not have to be accountable to anyone! No shareholders, no stock market, no shark loaners, no jerky knee selling, no buying lows, nothing..

And, their watches are still the best status symbols for the masses. Add to that the AD network they’ve shrunk, and now also own and control. They have almost all the levers available to them. Even if the world went down to nothing but oligarchs running the world, they’d still be ok. Hey, oligarchs like Rolex watches too!!

Just my opinion, I’ll shut up and color now…

Rolex as a business is very secure. So are the others. I tried to emphasize this as a relative comment… Rolex simply has more marginal customers due to volume and brand positioning. This is not a knock but with an economic decline, JLC, for example… their retail customers already are taking significant immediate value hits after purchase. It is a wealthier customer and lower volume.

The relative impact is on volumes. But it is rather pointless anyways. Everyone gets hit.

I actually agree with you on most of your points.

[Cambo]

Originally Posted by Paddydog52

So something has come along to push new and used prices across the world back up to peak pandemic levels, I always thought it would need to be something major to see those levels again so soon, the only headache you will have is when is the top before the turn again downwards.

I’m not agreeing with this…. The pandemic put a lot of money into people’s pockets in the form of government handouts….this is a whole different animal…most people woke up this morning poorer than they were yesterday.

[fflump]

Rolex have a huge supply- demand buffer currently vacuumed up by grey dealers. They can use this buffer to maintain retail sales at a higher selling point in the US.

[brandrea]

The Everest take

https://www.everestbands.com/blogs/b...oUpj_Mo.dYenhA

I don’t think Rolex will be switching to manufacture watches in the US any time soon.


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[Calatrava r]

Originally Posted by fflump

Rolex have a huge supply- demand buffer currently vacuumed up by grey dealers. They can use this buffer to maintain retail sales at a higher selling point in the US.

Rolex has no inventory just sitting around. Everything they make is sold quickly through their AD network. Just because you don't see watches for sale in the stores doesn't mean ADs are not getting watches regularly and selling them to real customers. Point of fact Rolex could raise their MSRP across the board quite a lot and it would not really impact their sales that much with demand still outpacing supply.

[Calatrava r]

Originally Posted by brandrea

The Everest take

https://www.everestbands.com/blogs/b...oUpj_Mo.dYenhA

I don’t think Rolex will be switching to manufacture watches in the US any time soon.



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$1,690.00. This was the interesting number. This is the article's estimated Cost of Goods Sold on a $10,400 Submariner. It is really eye opening to understand what these watches actually cost to make and what they ultimately sell for. Rolex charges what it charges the end user because it can, and the market will pay it. It is really as simple as that.

[douglasf13]

Originally Posted by BraveBold

Rolex as a business is very secure. So are the others. I tried to emphasize this as a relative comment… Rolex simply has more marginal customers due to volume and brand positioning. This is not a knock but with an economic decline, JLC, for example… their retail customers already are taking significant immediate value hits after purchase. It is a wealthier customer and lower volume.

The relative impact is on volumes. But it is rather pointless anyways. Everyone gets hit.

I actually agree with you on most of your points.

Rolex also doesn’t have to appease stock holders and have LOTS of cash, so they can go business as usual, just like they did during the recession.

[FloydRedford]

Originally Posted by Giangos

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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News flash: Actually we do a few billion $ with Russia. Not a huge amount but it definitely exists.


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[Duke Nukem]

Originally Posted by FloydRedford

News flash: Actually we do a few billion $ with Russia. Not a huge amount but it definitely exists.


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$3.5Bn currently.

[BraveBold]

Originally Posted by douglasf13

Rolex also doesn’t have to appease stock holders and have LOTS of cash, so they can go business as usual, just like they did during the recession.

Actually, the real secret is what they can do during boom times. Most businesses with their attributes and demand base would have expanded massively to more appropriately satisfy demand. Public companies would be driven to grow - and Rolex would have increased capacity over the last few decades at a very different pace.

Conservative growth protects them in downturns on several levels. Doesn’t insulate them entirely (due to volume and customer mix) but it helps.

[Fleetlord]

Marginal impact at retail. Won't be anywhere near 31% at retail.

Any brand pushing a YUGE increase is taking advantage for Greed.

[rolleyme]

Import into Russia and export into the US. Wonder if that's cheaper. lol

[wjj]

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.

Some of the watches on the secondary market are coming from outside the US. Those would be subject to varying tariffs depending on the country they’re coming from.

[Dr. Robert]

Originally Posted by JRell

gracias, merci, salamat po

De nada, de rien, payag ka


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[KenRose]

Originally Posted by aceofangel

If it’s just a bargaining chip for negotiations it would be smarter to target individual or groups of countries to pick them off one by one…

of course it would be even smarter to not equate trade imbalances with subsidizing other countries but hey, why lets facts get in the way

[alllexandru]

Originally Posted by brandrea

The Everest take

https://www.everestbands.com/blogs/b...oUpj_Mo.dYenhA

I don’t think Rolex will be switching to manufacture watches in the US any time soon.


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99% of the imported US goods are tax free in Swiss
Still you go and put tariffs on , wait we know how these % were calculated ….

Good mathematics on article self explanatory for everyone

[Harry-57]

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?

That sounds about right at the moment. I hear they're building robots to do it. And if you make it through customs and somebody subsequently thinks you might have slipped something through you'll be snatched off the street.

(hopefully)

[Ceb]

Interesting (from Rob Corder - WATCHPRO)

My hunch is that they will share the pain around because they need to minimise the price rise that is passed onto consumers in the United States.

This will mean retailers, wholesalers and manufacturers each share the cost of the tariffs.

Let’s take the example of a watch with a $10,000 retail price imported with a taxable value of $5,000.

The $5,000 value of the watch will incur an additional $1,550 tariff for the importer. Passing on this cost to the consumer would increase the price of their watch by 15.5%; better than 31%, but still enough to mean brands would need to adjust prices worldwide to close the differential.

But the wholesaler and retailer could eat half of the cost each, meaning a price rise of 7.75% to the consumer. While nobody welcomes this sort of inflation, we are talking about a watch market that barely noticed when Rolex increased the prices of its gold watches by up to 14% in January this year.

However, a price differential of 7.75% between the United States and other major markets would not be tolerated for long, so the biggest brands would look to close it by limiting the rise in the United States and bumping prices around the rest of the world.

Going back to the earlier example, the currency adjusted price for a Submariner might rise worldwide, including in the United States, by 1-2%, a perfect outcome for American jewellers, which might also be benefiting from an improving economy if — as my conversations with US retailers today suggest — President Trump turns out to be right about what will make America wealthy again.