Tariff imposed and Watch Prices in the USA

[Hollie_Rollie]

Originally Posted by ronricks

Secondary watch market is really struggling right now. Prices aren’t ‘going up’ and any grey dealer on Instagram etc who tries to perpetuate this is FOS. it’s wishcasting at the most desperate level.

Absolutely. It will be interesting to see how the tariffs impact the used market

[gwozhog]

Originally Posted by explorer42

I was employing a concept called irony in my post above about Rolex moving production to the US… I did think it was a concept that was well understood in Yorkshire.

I saw the Land Rover announcement. Other companies can’t be far behind in making the same decision…potentially even Rolex, which isn’t going to help those fabled waiting lists. Those penguins are going to be more likely to get a flippers on a Pepsi now than the average US waitlister.

Gulf of America and Rolex stamped USA Made on the dial. Might as well

[gwozhog]

Originally Posted by swiss_seth

You don't understand Switzerland

Will never forgive myself for not pulling the trigger on a solid gold Kobold that was gifted by Tony Soprano. It was only 6k on ebay years ago.

[Zerouali]

Originally Posted by 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.

All that only holds true for products where US sales are a large percentage of that brands sales and they rely on those sales.

In Rolex’s case they have a long long list of eager customers round the world waiting for their product.

Why would Rolex eat some of the tariff rise or try and increase prices worldwide when they could just divert deliveries everywhere else in the world and sell the same number of watches at the same margin as they did pre-tariffs?

[Calatrava r]

Originally Posted by ronricks

Secondary watch market is really struggling right now. Prices aren’t ‘going up’ and any grey dealer on Instagram etc who tries to perpetuate this is FOS. it’s wishcasting at the most desperate level.

Some brands are not moving on the used market, but they never did. Historically, most watches were ultimately thrown away. Having said that, the hot models are selling fast on secondary markets. Not too many PP 5811s sitting around. Yes, the prices fluctuate but that is the nature of used goods markets. The fact the Covid price spike did not last forever certainly doesn't mean the secondary markets are struggling. Margins generally remain the same. Remember, a hot watch cost the used dealers more to buy.

[cyind]

Originally Posted by rajurama

Rolex Switzerland will Sell the watches at Factory Cost (this is much lower than AD cost) to Rolex USA .

Rolex USA import invoice is much lower hence the 31% on its cost will be low.

Rolex USA distributes locally to ADs.

Rolex Retail prices should remain unchanged or at most 5-10% up which they did it anyways.

Finally someone understands how business is done!

[cyind]

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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Everest calculations are all wrong. The man needs a calculator and some common sense. He marks up the tariff by 4x also. This makes no sense and no business would do that. The max passed on to consumer will be the 31% on top of the COGS, so only $523.90 in his example. This is how the numbers actually look.

Before Tariffs

Rolex COGS--- $1,690.00
4x Markup on COGS paid by AD to Rolex--- $6,760.00
Final Retail Price with AD markup 35%--- $9,126.00

After Tariffs (31% applied to Rolex COGS)
Rolex COGS--- $1,690.00
31% Tariff--- $523.90
4x Markup on COGS paid by AD to Rolex--- $6,760.00
Final Retail Price with AD markup 35% + COGS tariff--- $9,649.90

NET Price Increase 5.43%

[hojlund]

Originally Posted by rajurama

Rolex Switzerland will Sell the watches at Factory Cost (this is much lower than AD cost) to Rolex USA .

Rolex USA import invoice is much lower hence the 31% on its cost will be low.

Rolex USA distributes locally to ADs.

Rolex Retail prices should remain unchanged or at most 5-10% up which they did it anyways.

brilliant!

[GB-man]

Originally Posted by Zerouali

.

Why would Rolex eat some of the tariff rise or try and increase prices worldwide when they could just divert deliveries everywhere else in the world and sell the same number of watches at the same margin as they did pre-tariffs?

The US consumes something like half the Rolex inventory annually. China is by far the second largest market and Chinese buyers have taken their foot off the gas a few years ago for various reasons.

There’s nowhere to divert that many watches.

[Roger Lococco]

Originally Posted by GB-man

The US consumes something like half the Rolex inventory annually. China is by far the second largest market and Chinese buyers have taken their foot off the gas a few years ago for various reasons.

There’s nowhere to divert that many watches.

Out of curiosity, why has demand in China declined?

[hojlund]

Originally Posted by Roger Lococco

Out of curiosity, why has demand in China declined?

because of the collapse of the housing market.

[Carguy87]

Originally Posted by DoricSpiker

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


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Well they don’t catch the smart ones lol. Not advocating for anyone to do anything they shouldn’t, but hypothetically I’d assume one would mail the box and papers home separately and just wear the watch.

[Kevin Rohrer]

US puts 31% tariff on Swiss imports | Impact on US watch enthusiasts and Swiss watchm


Which is why I bought my 2nd Rolex today rather than next year.

[KenRose]

Originally Posted by rajurama

Rolex Switzerland will Sell the watches at Factory Cost (this is much lower than AD cost) to Rolex USA .

Rolex USA import invoice is much lower hence the 31% on its cost will be low.

Rolex USA distributes locally to ADs.

Rolex Retail prices should remain unchanged or at most 5-10% up which they did it anyways.

Why on earth would they do that? Sell them at cost? Why not just reduce production then?

[Zerouali]

Originally Posted by GB-man

The US consumes something like half the Rolex inventory annually. China is by far the second largest market and Chinese buyers have taken their foot off the gas a few years ago for various reasons.

There’s nowhere to divert that many watches.

I’m not so sure about that. Rolex don’t publish sales breakdown numbers so I’m not sure how you’d know the USA is 50% of Rolex sales.

The USA has the around 20% of worldwide AD’s, I can’t see 20% of stores selling 50% of worldwide stock.

[Duke Nukem]

Originally Posted by Zerouali

I’m not so sure about that. Rolex don’t publish sales breakdown numbers so I’m not sure how you’d know the USA is 50% of Rolex sales.

The USA has the around 20% of worldwide AD’s, I can’t see 20% of stores selling 50% of worldwide stock.

Have you not seen the recent Morgan Stanley report on watches?

GB-man is right.

[SS Oyster]

Originally Posted by Maleg

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.

Do you not understand that the strength of a country does not rely on how cheap something is for the consumer? Why do we need to buy cheap things? Because we can't afford to pay more because we LOST OUR MANUFACTURING JOBS! We have a gig economy, where Uber drivers can only afford a $350 television from Walmart made in China. What is that drive instead worked a $75/hour manufacturing foreman job making televisions? Well, that's not possible, because TVs made in the US would: (1) have to compete with TVs made in China with no tariff and cheap labor, and (2) can't sell in China because US televisions get tariffed to raise their price relative to TVs made in China.

In the meantime, if we cannot get televisions it's a national security risk to not have any TVs made in the USA, which is 100% the case right now. This is proven out by the House Select Committee on the Chinese Communist Party (CCP) letter to Defense Secretary Austin in September 2024. See for yourself here --> https://selectcommitteeontheccp.hous...anies%2C%20BOE

[77T]

Originally Posted by KenRose

Why on earth would they do that? Sell them at cost? Why not just reduce production then?

Agree with the first part - not the second part. Rolex is raising production as the new factory comes on line methinks. They need to pay for that investment in capacity. RolexSA could simply curb distribution for RUSA.

Following some of the maths people have put up here is bewildering. It would yield negative margins.

We have understood the GPM at ADs for years. They are contractually obligated to an MSRP and a Rolex COGS - but here in US can add fees like State sales tax, local sales tax, etc.

It's the OpEx that is in play when extra tariffs come on board. Until now, those were imbedded into RUSA COGS (and included that distribution system overhead, CapEx, salaries, taxes, and importer fees (tariffs accounted for already). If tariffs are raised, RUSA decides the amount passed through. We won't know that for a while methinks - Swiss Gov't. may work to get a carve out for pharma and horology.

At the AD level -

•Operating Expenses: 20% to 30% of sales
•Carry on Debt: 5% to 8% of sales
•Taxes: 20% to 30% of net income (incl. FIT/State/City)

These figures are general estimates. So I'd expect a tariff surcharge element that can be tacked on (and subsequently taken away) as we navigate the coming year.

Turning the entire MSRP/COGS on its head for something at an AD that represents maybe 25% of total sales (excepting boutiques) doesn't make business sense to me.


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[Zerouali]

Originally Posted by Duke Nukem

Have you not seen the recent Morgan Stanley report on watches?

GB-man is right.

I have seen (presumably) the same report, it was linked on here. The one that says Rolex is the biggest Swiss watch brand with roughly 32% market share?

I can’t see anything in the report that says roughly 50% of sales are in the USA and it even states in the report the top brands do not release sales figures so all values are estimates.

[omar10213245]

Originally Posted by Kevin Rohrer

US puts 31% tariff on Swiss imports | Impact on US watch enthusiasts and Swiss watchm


Which is why I bought my 2nd Rolex today rather than next year.

Congrats! What'd ya get??

[TheVTCGuy]

This is probably a stupid question, I know nothing about economics, tariffs, etc. but could anything POSITIVE occur from this? Will maybe Rolex be more attainable?

[SS Oyster]

We all cry about the price of a Rolex with 31% tariff. Forget that, if we do nothing, what do you think will be the price of a loaf of bread when the national debt reaches $100T?

Well, way before we get there, we won't have enough money to service the interest on the debt. That loaf of bread will cost you around the price of a GMT Master II today, and you can forget your 401k, which even if full of $25M will be worthless as 25,000,000 x $0.00 = $nothing.

So, maybe we should be willing to give someone with a plan to try leveling the playing field, stop the ripoff that's gone on for 80+ years, and focus on the survival of the USA instead of only thinking about how to get the cheapest "stuff".

[Solo118]

Originally Posted by TheVTCGuy

This is probably a stupid question, I know nothing about economics, tariffs, etc. but could anything POSITIVE occur from this? Will maybe Rolex be more attainable?

I do not think it would be, even if the price actually went up 31% (it won't)

[FloydRedford]

Originally Posted by SS Oyster

We all cry about the price of a Rolex with 31% tariff. Forget that, if we do nothing, what do you think will be the price of a loaf of bread when the national debt reaches $100T?

Well, way before we get there, we won't have enough money to service the interest on the debt. That loaf of bread will cost you around the price of a GMT Master II today, and you can forget your 401k, which even if full of $25M will be worthless as 25,000,000 x $0.00 = $nothing.

So, maybe we should be willing to give someone with a plan to try leveling the playing field, stop the ripoff that's gone on for 80+ years, and focus on the survival of the USA instead of only thinking about how to get the cheapest "stuff".

Did you say “plan”?!? Ha, good one. The plan is the forthcoming tax cut for the fat cats. You watch. And keep an eye on the deficit, too. Please come back to this thread in a couple years. See how it ages.


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[Kanadakid]

believe that in the long run smart countries will come to the table like Vietnam and reduce their tariff, VAT for USA products. In turn we will do the same so the price of Rolex watched may go down. Some countries like China also have export duties, meaning when a factory in China ships to Usa they have export customs as well. So China get money when we buy their products and collect heavy duties on USA imported products. We are just leveling the playing field. The imbalance is so out of line that China has the most to lose. Other Asian countries will see the opportunity to increase business with the world's largest customer. Other counties will follow suit. Hopefully Switzerland will recognize the opportunity. Some will and some won't.

[Texasjim]

Originally Posted by enjoythemusic

Nope, it's the Oaks. They grab up all the light, and worse still, ignore pleas(!) from the Maples. Can't the Maples just be happy with their shade?

PS: My fave kit of his.

I love Rush

[77T]

Originally Posted by enjoythemusic

Nope, it's the Oaks. They grab up all the light, and worse still, ignore pleas(!) from the Maples. Can't the Maples just be happy with their shade?

PS: My fave kit of his.

Clever Lad, you be.

Oak shade...


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[77T]

Originally Posted by TheVTCGuy

This is probably a stupid question, I know nothing about economics, tariffs, etc. but could anything POSITIVE occur from this? Will maybe Rolex be more attainable?

Not a stupid question at all. What many haven't worked out is the scale of TCO (Total Cost of Ownership)

For an example, an SS Daytona MSRP would rise 20% - that wouldn't stop anyone who could get one.
Why? The secondary market on these are around 2x so even if you fell out of love, there is zero risk.


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[Ichiran]

MB&F has sent letters to customers asking them to pay the additional 31% tariffs, or give up their queue. MB&F is not absorbing even 1%. I suspect this could the norm for all the other brands too. Rolex is in an even better position than MB&F and their watches are hot globally. Why would they pay for the tariffs, or "equalize" the effects of US tariff on Switzerland to the rest of the world? Not sure it makes sense for a Singaporean to subsidize your tariffs? Luxury watches in China are more expensive than the rest of the world due to consumption tax but don't see Swiss manufacturers adjusting their wholesale price or making other countries paying for it for equalization.

[Slackergirl]

Seems like if sales go down in the US with the 31% tariff Rolex could pretty easily shift supply to other areas of the world. Everyone over in Europe and Asia enjoy shortening time on wait/wish lists