Tariff imposed and Watch Prices in the USA

[HiBoost]

Originally Posted by EverCloserUnion

Just popped over to Lesotho to set up a small business exporting used Rolex watches from the Kingdom to the United States.

Did I miss anything while I was away?

Just some random musings on the "art of the deal"

[crazycarlitos]

Long thread, yet “entertaining” to read.

At least now I know who the kool-aid drinkers are…

[liberalclown]

Originally Posted by Dave O

You missed my point entirely. The US at one time was self sufficient. We didn't rely on other countries for critical supplies. Most recently, China was very close to buying one of our last steel manufactures until we stopped it. We rely much to heavily on others for critical pharmaceuticals. Chip making is mainly outsourced as well. During covid we couldn't get the critical pharmaceuticals we needed. Many automotive manufacturing plants shut down because we couldn't get the chips we need that cars now depend on. We finally have someone that is saying this has to stop. We need to bring some of this critical manufacturing back.

I'll say it again. We may not like how it was implemented, but we have to give it some time to see where it all shakes out.

It wasn’t China, it was Japan (Nippon Steel), one of our biggest allies and with the conditions US can acquire at the cost at the unprecedented times, so IMO that block was unnecessary.

And I agree that critical manufacturing should be brought back, but COVID is not a good example, even if we had them in house, we would still have problems because there wasn’t a pause because Taiwan and China stopped selling because they didn’t want to, because they couldn’t and we wouldn’t as well. For the chips, Biden passed the CHIPS Act yet the current administration killed it immediately, so it makes it hard to justify they are playing the tariffs to bring back manufacturing. Another note is, they also shared they have no interest bringing the jobs back, just manufacturing in automated way so public shouldn’t bet on bringing manufacturing will improve purchasing power.

[Calatrava r]

What I am trying to understand is how tariffs can fix the trade imbalance problem, if it is one, with China. The problem is we import too much and want a lot more manufactured in the US. We all get that, and it is a laudable goal. The way to accomplish that is to incentivize businesses to relocate their manufacturing facilities in the US through tax incentives and the like. This at best is a gradual process. All tariffs do to the importing country in the short term is raise the cost of goods to its citizens, but the goods are still made overseas. Tariffs cannot alter that reality in the short term or even medium term. Incentivizing manufacturing to return to the US does what you want with no impact on prices. I must be missing something.

[brandrea]

Originally Posted by Calatrava r

What I am trying to understand is how tariffs can fix the trade imbalance problem, if it is one, with China. The problem is we import too much and want a lot more manufactured in the US. We all get that, and it is a laudable goal. The way to accomplish that is to incentivize businesses to relocate their manufacturing facilities in the US through tax incentives and the like. This at best is a gradual process. All tariffs do to the importing country in the short term is raise the cost of goods to its citizens, but the goods are still made overseas. Tariffs cannot alter that reality in the short term or even medium term. Incentivizing manufacturing to return to the US does what you want with no impact on prices. I must be missing something.

The “you attract more bees with honey” approach.

[MarioB83]

Originally Posted by Dave O

You missed my point entirely. The US at one time was self sufficient. We didn't rely on other countries for critical supplies. Most recently, China was very close to buying one of our last steel manufactures until we stopped it. We rely much to heavily on others for critical pharmaceuticals. Chip making is mainly outsourced as well. During covid we couldn't get the critical pharmaceuticals we needed. Many automotive manufacturing plants shut down because we couldn't get the chips we need that cars now depend on. We finally have someone that is saying this has to stop. We need to bring some of this critical manufacturing back.

I'll say it again. We may not like how it was implemented, but we have to give it some time to see where it all shakes out.

That simply happened cause you are no longer competitive in that industries anymore and others are.
You can maybe try to manufacture medicines in US, be ready to pay triple for them.
Also a bit funny to talk about health access in your country as a metric for a tariff or fairness discussion

[Dr. Robert]

Originally Posted by crazycarlitos

Long thread, yet “entertaining” to read.

At least now I know who the kool-aid drinkers are…

Don’t look at me, I prefer Hawaiian Punch


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[Presa canary]

Ron Vara and John Baron agree with what’s being done here

[Paddydog52]

It will likely be the case that Rolex will just spread the costs across all of their locations so the new and used prices will probably rise across the board by anywhere from 5-20%

[rlj676]

Originally Posted by MarioB83

That simply happened cause you are no longer competitive in that industries anymore and others are.
You can maybe try to manufacture medicines in US, be ready to pay triple for them.
Also a bit funny to talk about health access in your country as a metric for a tariff or fairness discussion

The mfg cost of medicine (and many other things like an iPhone) is a tiny fraction of the price paid. You’re paying for the research, and in the case of the USA we’re disproportionately paying for it (far more than fair share) due to our corrupt healthcare and other countries caps.

So no, you most certainly won’t pay triple or anywhere near it. Not for any product.

[rlj676]

Originally Posted by BraveBold

For China it is the “other” category that matters.

The requirements back in time on JV investments.

SOE IP and tech sharing requirements to condition investment or licenses.

Massive subsidies.

General interference.

Long list… but tariffs would be low.

However, what works in one system a) may not be optimal for another and b) may not be compatible with objectives.

China is not a case study I’d point to for much, at least nothing related to living standards vs the US. Even with the low starting point and massive improvements.

Ideally we would target the deficiencies for both US wealth distribution (there are ways but willpower and political support is lacking) and fair competition (again there are ways but some are not “smart” ways).

All good points, but at this point something must change. This is within control of the only person (or persons) with the wherewithal to do the very difficult.

Ultimately certain industries are vital to the survival (literal defense) of the US, auto (defense mfg industrial base), ICs, meds are specifically called out for this in the official documents.

Last, China seems intent on invading Taiwan by all indications I’ve seen. More importantly, much more connected major industrial players have stated long before these tariffs all their supply chain must be out of China in the not distant future (implied for this reason). Take away being Trump might as well go all out trying to get fair trade w China or force US supply out now vs then anyway.

[Mr Ben]

Originally Posted by Presa canary

Ron Vara and John Baron agree with what’s being done here

Thank you - this was cryptic enough I looked it up and it just sent me down a very entertaining wormhole of reading for half an hour!

Astonishing.

[mongrelnomoad]

Originally Posted by JRell

That was the reason for the CHIPS Act - totaling more than half a trillion dollars in private investments, and creating over 500,000 American jobs.

Exactly. The CHIPS act and the IRA, tied with government funded research (now all cut), were setting the US up to be the global leader in clean-tech, innovation and the future of industry and technology - and creating a tonne of new jobs in the process.

If Americans prefer to be the world’s no. 1 producer of trainers and tees, be my guest, but you’re not going to have an affluent society and the world’s preeminent economy doing so.

[SS Oyster]

Originally Posted by pessoa00

Those jobs weren’t lost, they were transferred to other industries, namely services and tech, where US has a tremendous trade surplus with the rest of the world. In fact, US has currently among the lowest unemployment rate of the past 50 years.

It is intellectually deceiving to only include goods on the trade deficit to justify declaring a trade war with the rest of the world (well, except for Russia…)

It is also naive to think those manufacturing “jobs” will be transferred from China, Vietnam, India, etc., back to the US, especially when the few that could maybe take those jobs (illegal imigrants) are being expelled from US.

On the topic of watches, what to you think Swiss companies will do? Open factories in US for made in US made watches? Who here would buy a US made Rolex? Just the concept IMO is ridiculous. Rolex just did a price increase of about 10% on gold watches and 18% on Daytona gold watches. They could easily get away with an increase of 15% on steel watches for 2025 and adjust the remaining with another increase next year.

To even out things IMO the rest of the world should impose tariffs on US services by the same amount US is imposing on goods. That would be fair trade.

So your plan President Pessoa00 is to ignore the fact that we no longer make anything and if we get into war or China “repatriates” Taiwan, (when we get cut off by China) is to tell your citizens, “Well, I thought we were good only having a services economy. I knew the United States no longer made anything (e.g. pharmaceuticals, comms/IT hardware, steel, etc.) here in the USA, but I ignored all those strategic risks and “hoped” things would get better. I did some polling and found out that ‘doing something’ about these risks would involve some economic pain, so I just kicked the can down the road, knowing insolvency would happen on the next guy’s term, not mine. But heh, at least Tesla stock dropped again today, right?”


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[Andad]

Originally Posted by SS Oyster

Except he keeps talking about the tariff applying to the retail price when it only applies to the COGS.


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Only if you are prepared to take a huge drop in profit.

tarrifs @ 31%

Let's say you have a product with the following costs: 

COGS: $6200
Desired Gross Profit Margin: 62%
Calculate the Retail Price:
Desired Gross Profit: $6200 *62% $3844
Retail Price: $6200 (COGS) + $3844 (Desired Gross Profit) $10044

Impact of Increased COGS
If your COGS increases to $8122 (up 31%), while the desired gross profit margin remains the same: 

New Retail Price:
Desired Gross Profit: $8122 * 61% $4954
New Retail Price: $8122 (COGS) + $4954 (Desired Gross Profit) $13076
Therefore, you need to increase the retail price to $13076 to maintain your desired gross profit margin.

[Presa canary]

Originally Posted by Mr Ben

Thank you - this was cryptic enough I looked it up and it just sent me down a very entertaining wormhole of reading for half an hour!

Astonishing.

Astonishing. Insane. Unbelievable. We’re living in a twilight zone episode

[Stupot]

Morning,

Just curious from the American side what's happening on the ground.

Am I right in saying that's the tariffs live and in effect?

What has that resulted in at the AD's, and the website, have the prices gone up?

[DoricSpiker]

I gave a young American lady some help on the London tube system last weekend as she was lost and already 30 mins late for a first date. Bless her, she was in a bit of a state!

Anyway my questions are : was I ripped off? Should I have charged her for my expert advice? Did she go to her date thinking she had successfully done me over like a kipper? I am waiting for her call to repent all that she did, will she call?


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[EverCloserUnion]

Originally Posted by Paddydog52

It will likely be the case that Rolex will just spread the costs across all of their locations so the new and used prices will probably rise across the board by anywhere from 5-20%

I think that's a sensible assessment.
I suspect Rolex will not want arbitrage opportunities creeping in.

[ronricks]

Originally Posted by Stupot

Morning,

Just curious from the American side what's happening on the ground.

Am I right in saying that's the tariffs live and in effect?

What has that resulted in at the AD's, and the website, have the prices gone up?

I can’t imagine someone paying more for an obsolete wristwatch considering all that is going on in financial markets right now. Especially on the secondary grey market. I saw a few dealers post that “prices are going up” for new and used watches on instagram and the comments were absolutely brutal towards them. The idea that a price will rise on a beat up 20 year old five digit Rolex because of tariffs is laughable and ridiculous. These tariffs are temporary and won’t last. Why would you run out to buy something that is already overpriced to begin with instead of waiting a few weeks?

[Harry-57]

Originally Posted by Presa canary

Ron Vara and John Baron agree with what’s being done here

That's good.

[Moondoggy]

This is just a classic game of brinkmanship don’t get to excited folks, dust will settle, no difference to a corner deli doing deals.

[1st amg]

Originally Posted by Cambo

These are interesting times…if Carney (non elected “Prime Minister”), and the Liberals get back in power, western Canada will be looking at options. We can only take so much.

I agree, at the risk of getting this thread derailed due to political talk, it would be interesting on the swiss watches being sold in Canada to Americans.

[Calatrava r]

Originally Posted by Moondoggy

This is just a classic game of brinkmanship don’t get to excited folks, dust will settle, no difference to a corner deli doing deals.

The new tariffs will be felt in a few weeks by consumers. It will be interesting see where the mood and dust settles once that happens.

[BraveBold]

Originally Posted by Calatrava r

The new tariffs will be felt in a few weeks by consumers. It will be interesting see where the mood and dust settles once that happens.

This, and already-happening impacts, is key.

Sustained tariffs (as announced) will decimate the global economy. Decimate.

However, I expect most will be substantially or entirely reduced. Question is over what time frame?

Already restructuring is happening across multiple sectors as the impact is occurring (because companies must make decisions, even in the absence of stability). So those layoffs will start showing up, impacting sentiment. Of course, there is also the real effects of the job losses themselves, particularly if the uncertainty remains.

The damage may already be done and now it’s merely a question of extent. Minor hiccup? Unclear if that remains a probable path, with the window closing further every day. Run-of-mill recession? That is roughly what markets anticipate… but that is only if resolved in weeks or a month.

Also, many do not understand how interwoven other aspects are. Bond yields are dependent on global purchasing, including significantly from those on the receiving end of tariffs. Do not for a moment think they are unaware of the leverage they have. This could significantly amplify negative effects here and the cost to offset by the Fed will be tremendous.

This is why I say so few can have an informed view on implications. It takes multi-domain expertise and you ignore one critical aspect at your own peril. Dr. Siegel has it right.

[Mystro]

The news hype is in overdrive to scare (what they do best) and to set up plausible price hikes by businesses if necessary or not. It’s the same Covid market scare tactics all over again. The bottomed feeder car salesman are already using their “lock your pre tariff pricing in today” advertising. It’s nauseating how frantic some can be worked up and manipulated.

What’s funny is those that went berserk that some were not sharing their same frantic concerned during the Covid years are also going bananas others are not concerned again about tariffs.

[Mystro]

Originally Posted by JRell

Big difference, this was self-inflicted. Not to mention the trust we are losing on a world stage. Also with Covid, many people died, that was kind of a big deal.

Meh, it’s all about perception keeping politics out of it and keeping things in perspective. The world will not spin out of control and the sun will shine tomorrow.

[mannyv11]

Originally Posted by Mystro

Meh, it’s all about perception keeping politics out of it and keeping things in perspective. The world will not spin out of control and the sun will shine tomorrow.

sun will always shine tomorrow whether you and I are still spinning on the rock is a different question

[Mystro]

Originally Posted by mannyv11

sun will always shine tomorrow whether you and I are still spinning on the rock is a different question

Exactly and worrying about money or things you can’t change will only shorten your life and generally make your life significantly more miserable while you are breathing.

Ones ability to adapt and overcome adversity determines the level of success and happiness. A herd mentality way of thinking generally will keep you in the back of the herd.

[mongrelnomoad]

Originally Posted by Calatrava r

The new tariffs will be felt in a few weeks by consumers. It will be interesting see where the mood and dust settles once that happens.

Lots of leopards gonna eat lots of faces.