Tariff imposed and Watch Prices in the USA

[L_S_SHOE]

I had planned to pick something up this year but no longer. I’m holding. I have no intention of making any large purchases in the foreseeable future. Not with this much uncertainty. I’m not alone, and I don’t see how we avoid a worldwide recession at this point. It would take a complete reversal of policy tomorrow.

A lot of things selling well today won’t be selling well soon, particularly if prices go up and paychecks go down…


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[L_S_SHOE]

Originally Posted by 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

Europe and Asia will be hurting. I could be wrong, but I wouldn’t automatically assume they’ll be in a position to pick up the slack.

[Old Expat Beast]

Hong Kong is a free port and a separate entity within the WTO to mainland China (PRC) and has never charged any tariffs on US imports. Now though, we're lumped in with the PRC and hit with the same 34% tariff.

[rajurama]

Originally Posted by KenRose

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

Rolex Switzerland 'Owns' Rolex USA its one and the same!
You 'Can' and will Sell 'YourSelf' at cost to reduce the import tax.

Lol

[rajurama]

Rolex USA makes profit by selling and distributing to US ADs. The profits are calculated of Rolex USA after their various marketing and operating expenses in USA and net profits can be repatriated or transferred legally to Rolex Switzerland after paying taxes in USA. Rolex USA is a subsidiary of Rolex Switzerland

[shaunylw]

Originally Posted by Tritto

Why would anyone in the US buy a watch with a 31% tariff applied when the who thing could be dropped T any moment because the President has changed his mind?


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If they were smart they wouldn’t. Especially on PM. The only modern Rolex i would buy under this would be a daytona.


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[Dhiren]

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.

Rolex could do that yes but it cannot as the US customs would term it under invoicing. There is an already established invoicing price that is recorded by US customs on watches brought in to the US by Rolex USA and duty paid on that invoice. Any reduction or under invoicing of price from Rolex SA to Rolex USA would trigger penalties and fines under customs duty evasion laws.


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[rajurama]

Originally Posted by Dhiren

Rolex could do that yes but it cannot as the US customs would term it under invoicing. There is an already established invoicing price that is recorded by US customs on watches brought in to the US by Rolex USA and duty paid on that invoice. Any reduction or under invoicing of price from Rolex SA to Rolex USA would trigger penalties and fines under customs duty evasion laws.


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Its not under invoicing, its inter company transfer pricing from Parent Co. To subsidiary which for all you know since years Rolex is selling at Real factory cost. Rolex USA will pay income tax and all other taxes in USA. The factory cost is way too low and if asked to prove Rolex can easily show the cost of Steel inside and movement and labor for the watch or Gold. Only thing their import cost will be higher would be precious metal models.

[Toffeeman]

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.

The logic of bumping up prices around the world to match that of US is tricky as it will in turn reduce the non-US demand. I am not sure watch makers willing to sacrifice non-US market share just to maintain the American market

[DoricSpiker]

Originally Posted by 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.

Delusional. You are not levelling any playing field. You are putting a levy on every country, even ones that have a trade deficit with the US. Ones with surpluses are getting a higher levy. You have levied an island with only penguins as inhabitants ffs! Do you realise the credibility hit you take when you do that, especially amongst the penguins!

This will affect prices of goods in the US. Push up inflation more in the US than other countries. Make exporters look for other markets. Wallop the stock market (already happening). Make European countries think about pacts with China and Canada to combat these levys. Yes the result will be the rest of the world doing more business with china! Lastly, boycotts of American goods will gather more pace. It’s happening now here in the UK. Of course some countries will do some sort of deal, the UK being one, but it will make little difference to the overall global economic picture, also the UK already buys more from the US than we sell.

The working class person, those dudes on the White House lawn cheering, get screwed the most, from more expensive everyday goods and their pension pots going through the floor. Go boss……….


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[Halifax Daytona UK]

Originally Posted by DoricSpiker

Delusional. You are not levelling any playing field. You are putting a levy on every country, even ones that have a trade deficit with the US. Ones with surpluses are getting a higher levy. You have levied an island with only penguins as inhabitants ffs! Do you realise the credibility hit you take when you do that, especially amongst the penguins!

This will affect prices of goods in the US. Push up inflation more in the US than other countries. Make exporters look for other markets. Wallop the stock market (already happening). Make European countries think about pacts with China and Canada to combat these levys. Yes the result will be the rest of the world doing more business with china! Lastly, boycotts of American goods will gather more pace. It’s happening now here in the UK. Of course some countries will do some sort of deal, the UK being one, but it will make little difference to the overall global economic picture, also the UK already buys more from the US than we sell.

The working class person, those dudes on the White House lawn cheering, get screwed the most, from more expensive everyday goods and their pension pots going through the floor. Go boss……….


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100% sense.

[brandrea]

Originally Posted by Carguy87

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.

Maybe not a good idea

https://www.cjme.com/2024/10/17/mont...tch-at-border/

[hojlund]

Originally Posted by brandrea

Maybe not a good idea

https://www.cjme.com/2024/10/17/mont...tch-at-border/

I don't buy this story, just a bluff from the Canadian custom.

[brandrea]

Originally Posted by hojlund

I don't buy this story, just a bluff from the Canadian custom.

Multiple news sources and a federal court ruling … ya it’s fake

https://www.montrealgazette.com/news/article560336.html


https://halifax.citynews.ca/2024/10/...tch-at-border/

[Roger Lococco]

Originally Posted by 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.

Why would the increase be 31 percent? I thought the tariff was on COGS.


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[DoricSpiker]

Originally Posted by brandrea

Maybe not a good idea

https://www.cjme.com/2024/10/17/mont...tch-at-border/

I agree we are going to be hearing more of these stories Brian. In the UK, if you are caught, you also get a criminal record as well as the fines. That would get me sacked.

Heading to Montreal in Aug! Had a voucher for pretty much anywhere on the eastern side of North America. We picked Canada!


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[brandrea]

Originally Posted by DoricSpiker

I agree we are going to be hearing more of these stories Brian. In the UK, if you are caught, you also get a criminal record as well as the fines. That would get me sacked.

Heading to Montreal in Aug! Had a voucher for pretty much anywhere on the eastern side of North America. We picked Canada!


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Well thank you for choosing to visit us!

If you’ve never been, you’ll love the city. Perhaps you’ll have a chance to see old Quebec City as well?

If you land anywhere near Toronto, please feel free to each out

[Paddydog52]

Originally Posted by DAGMoney

Your analysis is as accuate as any out there, and I susepct we'll see something like what you suggest. Time will tell if any of this sticks for long. It seems to be a daily,moving target....

Yep, as I suspected we will likely see a 6-7% increase worldwide as a starting point, whether it goes higher than that remains to be seen though

[DoricSpiker]

Originally Posted by brandrea

Well thank you for choosing to visit us!

If you’ve never been, you’ll love the city. Perhaps you’ll have a chance to see old Quebec City as well?

If you land anywhere near Toronto, please feel free to each out

Yes Quebec City is on the list.
Been to Toronto and Niagara last year and loved it. Proper large cosmopolitan city. Welcomed us with open arms.


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[Ichiran]

Originally Posted by Roger Lococco

Why would the increase be 31 percent? I thought the tariff was on COGS.

I said 31% tariffs not 31% increase on MSRP.

[brandrea]

Well enjoy! You’re in for a treat with Montreal and old Quebec City!


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[1st amg]

What if a Canadian(me) decided to sell a Rolex here? Would the USA members have issues to buy from said Canadian? Might be a good deal for you guys as your dollar is much stronger than my Canadian Peso.

[brandrea]

Originally Posted by 1st amg

What if a Canadian(me) decided to sell a Rolex here? Would the USA members have issues to buy from said Canadian? Might be a good deal for you guys as your dollar is much stronger than my Canadian Peso.

A lot of money could be made from the dollar arbitrage for sure. The challenge as always is clearing the watches through customs (either way) as in the above story I linked

[Rolexatlast]

Businesses add % margins to the basic cost to derive final price - Rolex manufacturer will make a set % on production costs, Rolex USA will make a set % of the product being distributed, ADs make a set % on the sales of the watches they sell.

If all those don’t, then they all become less profitable. And why should they do that, just because the US want to pay more for their watches?

Plus the US government will be making a nice earner, either to buy more arms or cut taxes, or maybe even spend on public services or infrastructure

And, anyway, we keep being told on this board by our Grey dealer friends that we should be happy to pay the ‘market price’ (i.e. a higher price), and are just entitled if we expect to pay the AD retail price.

[Rolexatlast]

Originally Posted by WatchEater666

I own a handful of consumer brands based out of the US.

If tariffs aren't reverted by mid-next week, we probably have to fire ~10% - 15% of the people at our portfolio brands. We are in consumer, and obviously we can't just increase prices massively overnight and have it work well. We have to go into cockroach mode.

BTW - one of them manufactures in the US, but our raw ingredients, our machiens, etc... are ALL IMPORTED. You can't buy these things in the US - they simply are not available lol

And our businesses have less than ~$100m in revenue. We can't afford to spend $10m to set up new supply chains overnight in the US.

Cool idea, but not practical.

Many small businesses will be wiped out. They dont have massive liquidity buffers. Your avg consumer brand NETS 10% - 15%! Nobody is sitting on enough cash to quickly boot up ops in the US.

I've also set up ~3x+ factories in the US for some of our other portfolio brands. It's REALLY HARD and expensive! It took ~2 years of planning @ 1 co lol...

Maybe that’s Trumps intention. Move US business away from importing goods to manufacturing goods, and improve balance of payments, and try to bring US debt under control

Every change has winners and losers.

[Rolexatlast]

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".

I was with you, sort of, until you got to your statement about “levelling the playing field”.

Am curious to know what you mean by this. Where is the US trying to compete against an unlevel playing field? Are the rest of the world really breaking WTO rules whilst the US is not?

Or maybe, the US just cannot compete on a level playing field and is trying to tip the playing field in their favour?

[JRell]

Originally Posted by Rolexatlast

Maybe that’s Trumps intention. Move US business away from importing goods to manufacturing goods, and improve balance of payments, and try to bring US debt under control

Every change has winners and losers.

Yeah good luck with that.

[Rolexatlast]

Originally Posted by JRell

Yeah good luck with that.

Absolutely

[YGRLX]

Lots of buyers remorse now…. For voting trump… not your watch purchase

[Calatrava r]

Originally Posted by cyind

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%

The tariff is not based on COGS, but rather what the import value is, i.e.., what price the importer is paying for the goods. In the US, even though RUSA is wholly owned by Rolex it is a separate company which buys the watches from the parent company and then resells them at a profit to the ADs. RUSA pays corporate tax only on its NOP in the US. Rolex is thus not involved directly in the US. Several writers have suggested the import value to be 50 to 60 of MSRP in the US which roughly equals a 20 percent increase to MSRP at 31%. The import value is higher because Rolex wants to earn its profit in Switzerland.