Will tariffs affect price of watches

[77T]

Tariffs are an economic weapon that needs careful use. And economics is a dismal science said Carlisle, a Scots philosopher. This phrase is often used to highlight the perceived limitations of economic analysis when it comes to addressing complex social issues. So we are in a net-negative emotional discussion - but here goes...

While the maths are beyond my actual experience, the $3.3T imported in 2023 is a reasonable jumping off point. But one must consider the entire value chain to be wholistic in a variable tariff increase as proposed (10% overall + a higher % on our top 3 imported goods from China, Mexico, and Canada).

To begin with, globally, the US is the largest importer of finished goods, raw materials, and services. We also over-consume more of that value than we export (for a net-negative balance of trade with several countries).

Tariffs occur when goods cross our national border during any stage of the value chain, meaning they can be applied at the point of importing raw materials, intermediate goods, or the finished product itself, depending on where in the production process the good is being moved across borders. This is difficult to assess accurately.

In a global value chain where production is fragmented across different countries, tariffs can be applied multiple times as intermediate goods cross borders at various stages of production, leading to a cumulative effect on the final price.

Let's be clear - for the $3.3T it is difficult to predict how the final selling price to a consumer will work out. But in retail - when the inventory arrives, the markup can be as high as 2.0 presuming the retailer won't absorb the higher tariffs by lowering its markup to 1.7-1.9 on the dollar.

Depending on where the tariffs are imposed, they can significantly affect different parts of the value chain, potentially impacting the competitiveness of industries relying on imported inputs.

Swiss watches - which we are discussing - have not threatened any purely domestic watch brands. Almost all US brands have some amount of their value impacted by imported goods. Can we say any American wristwatch is completely made in the USA from raw materials to finished product?
(Including the tooling)

Tariffs will ultimately increase the price of the final product for US consumers, as the cost of the tariffs is usually passed on through the supply chain.

In times of economic inflation (as we have experienced the past few years) there is one economic side-effect of tariffs - a damper on consumption.

We tread very close to causing a recession if consumers stop buying discretionary goods for a full business cycle.

I said it is a dismal science so please forgive the honesty.


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[brandrea]

Originally Posted by 77T

Tariffs are an economic weapon that needs careful use. And economics is a dismal science said Carlisle, a Scots philosopher. This phrase is often used to highlight the perceived limitations of economic analysis when it comes to addressing complex social issues. So we are in a net-negative emotional discussion - but here goes...

While the maths are beyond my actual experience, the $3.3T imported in 2023 is a reasonable jumping off point. But one must consider the entire value chain to be wholistic in a variable tariff increase as proposed (10% overall + a higher % on our top 3 imported goods from China, Mexico, and Canada).

To begin with, globally, the US is the largest importer of finished goods, raw materials, and services. We also over-consume more of that value than we export (for a net-negative balance of trade with several countries).

Tariffs occur when goods cross our national border during any stage of the value chain, meaning they can be applied at the point of importing raw materials, intermediate goods, or the finished product itself, depending on where in the production process the good is being moved across borders. This is difficult to assess accurately.

In a global value chain where production is fragmented across different countries, tariffs can be applied multiple times as intermediate goods cross borders at various stages of production, leading to a cumulative effect on the final price.

Let's be clear - for the $3.3T it is difficult to predict how the final selling price to a consumer will work out. But in retail - when the inventory arrives, the markup can be as high as 2.0 presuming the retailer won't absorb the higher tariffs by lowering its markup to 1.7-1.9 on the dollar.

Depending on where the tariffs are imposed, they can significantly affect different parts of the value chain, potentially impacting the competitiveness of industries relying on imported inputs.

Swiss watches - which we are discussing - have not threatened any purely domestic watch brands. Almost all US brands have some amount of their value impacted by imported goods. Can we say any American wristwatch is completely made in the USA from raw materials to finished product?
(Including the tooling)

Tariffs will ultimately increase the price of the final product for US consumers, as the cost of the tariffs is usually passed on through the supply chain.

In times of economic inflation (as we have experienced the past few years) there is one economic side-effect of tariffs - a damper on consumption.

We tread very close to causing a recession if consumers stop buying discretionary goods for a full business cycle.

I said it is a dismal science so please forgive the honesty.


Sent from my iPhone using Tapatalk

[GB-man]

Austerity no matter the flavor is a disgusting cake nobody wants to eat.

Unfortunate when you’re trying to reverse 35T in debt.

[BraveBold]

I covered the tariff impact earlier. It isn’t just higher prices in isolation. Everything is interconnected and there are reactions to these actions. If implemented as described, look for that mythical recession to finally arrive.

[TRS1]

Originally Posted by GB-man

Austerity no matter the flavor is a disgusting cake nobody wants to eat.

Unfortunate when you’re trying to reverse 35T in debt.

There are only two ways out of it - Austerity or Growth.

[Toxicant]

Or Rolex can make their watches in the USA.

[timepiececurator]

Originally Posted by Krash

So if we import approximately $3,500,000,000,000 worth of goods annually, a 10% tariff would amount to about $350,000,000,000 worth of revenue.

I’m not saying I’m for that, but I’m not sure why some people would be okay with raising taxes on US businesses from 21% to 28% (or higher), while at the same time, they are concerned about a 10% sales tax on foreign businesses, which is basically what a tariff is.


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Consumers would most likely end up taking the brunt of the hit in either situation.

[Krash]

Originally Posted by timepiececurator

Consumers would most likely end up taking the brunt of the hit in either situation.

Exactly. That’s why I find ironic that people get upset over one scenario but not the other.


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[BraveBold]

Originally Posted by Krash

E xactly. That’s why I find ironic that people get upset over one scenario but not the other.


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Who gets upset at one but not the other? I don’t… I see major problems with both.

I think the tariff idea is idiotic - if implemented. If a bluff and can extract concessions (and successful) fine. If implemented - terrible because tariffs are even less efficient (cause more inefficient economic distortions) than direct taxes (corporate or income).

Raising income taxes on the upper income levels is also a mistake. The real “hole” in tax policy is not on earners but rather in some forms of investment income and capital gains categories. This where the system fails and revenue can be generated without likely material negative economic consequences. If we are focused on corporate tax policies, let’s further explore ways to get corporations to pay the statutory rates (or closer to them) rather than increasing the rate level itself…

It is a complex topic but tariffs are generally even worse than taxes ($ imposed vs $ imposed) and in this particular environment, more fraught with risk due to potential for stoking another round of very high inflation.

[hambone1983]

Originally Posted by Andad

Are there watch manufacturers in the US that a tariff may benefit long term Rick?

certainly not any close substitute to Swiss watches.

I was just puzzled by the comment that there is some benefit to society in making luxury watches more expensive

[Cru Jones]

Originally Posted by Toxicant

Or Rolex can make their watches in the USA.

Yes, that’s the general theory with tariffs. Pass along the tariff cost to consumers or manufacturer locally. However, I’m not sure that is well adapted to a product that is inherently foreign: “Swiss made”. Would there be waitlists for Rolexes “made in Alabama”?

[Andad]

How many manufacturers in the USA will benefit from an increase in tariffs.

I thought this would be protection?

Is it all bad news?

[330ci]

Originally Posted by Cru Jones

Yes, that’s the general theory with tariffs. Pass along the tariff cost to consumers or manufacturer locally. However, I’m not sure that is well adapted to a product that is inherently foreign: “Swiss made”. Would there be waitlists for Rolexes “made in Alabama”?

As I mentioned previously, Rolex and plenty of other companies already have done this.

UK had Dennison cased watches, US had JB champion making bracelets, watches imported in pieces and assembled here, lower jewel count movements, etc. granted this was done when the US still had a watch industry

The Rolex market would just create sub variants and put a premium on the lower production variants like they already do.

I can see it now

“Tariff edition Rolex, MSRP + 50%”

[brandrea]

I will gladly pay more for the ones made in my motherland thank you 🇨🇭

[OG1982]

Didn't think we were supposed to talk politics here? Or is it OK if parties and individuals are not named?

[330ci]

Originally Posted by OG1982

Didn't think we were supposed to talk politics here? Or is it OK if parties and individuals are not named?

I don’t see any mention of politics anywhere. The effects of tariffs is an economic discussion not a political one.

[330ci]

Originally Posted by brandrea

I will gladly pay more for the ones made in my motherland thank you 🇨🇭

Rolex made Canadian market watches as well.

I had a Rolex Corvette which was alleged to be canadian market only, as well as a few Tudors. They made quite a few models in the 40s & 50s that were Canadian specific. Though more to do with marketing of the watch than production to save money.

My memory evades me at the moment but I know I’ve had a few others. Would be cool to see some more French date wheels and regional namesakes again

[brandrea]

Originally Posted by 330ci

Rolex made Canadian market watches as well.

I had a Rolex Corvette which was alleged to be canadian market only, as well as a few Tudors. They made quite a few models in the 40s & 50s that were Canadian specific. Though more to do with marketing of the watch than production to save money.

My memory evades me at the moment but I know I’ve had a few others. Would be cool to see some more French date wheels and regional namesakes again

That’s fantastic … I didn’t know that

Do you have any pictures?

I wonder where they were made? I’m thinking it would be had to have been near Toronto or Montreal …


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[330ci]

Originally Posted by brandrea

That’s fantastic … I didn’t know that

Do you have any pictures?

I wonder where they were made? I’m thinking it would be had to have been near Toronto or Montreal …


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https://watchestobuy.com/shop/rolex-corvette/ mine was a stainless model but the dial was the same.

These ones were just marketed to Canadians I believe, if they had contract cases I imagine they would be British made as opposed to Canadian made. For some reason the Canadian market seemed more in alignment with UK than the USA. (this example is in a contract case, by whom I don’t know)

I wouldn’t be surprised if there were a small amount of contract cases made in Canada, but would imagine most Canadian sold contract cases would be of UK or US origin.

Most of these watches were military models,sporting modified rebburg movements, small cases by modern standards and not particularly collectible sans a small group of niche watch historians. I recall a Tudor Essex I had as well, they were dime a dozen 10 years ago. Probably can still find them in the $500 range if you keep an eye out. They were fun to collect until the prices shot up. Tough to justify for the prices people ask these days though

[OG1982]

Originally Posted by 330ci

I don’t see any mention of politics anywhere. The effects of tariffs is an economic discussion not a political one.

The effects of tariffs, brought in by whom? Don't answer, as we all know the answer...

[330ci]

Originally Posted by OG1982

The effects of tariffs, brought in by whom? Don't answer, as we all know the answer...

Which is outside the scope of this discussion until you couldn’t help but try to be offended.


Go be insufferable elsewhere if you don’t have anything tariff related to discuss.

[OG1982]

Originally Posted by 330ci

Which is outside the scope of this discussion until you couldn’t help but try to be offended.


Go be insufferable elsewhere if you don’t have anything tariff related to discuss.

I'm merely asking a question. Only one person that has taken offence here and it certainly isn't me.

[330ci]

Originally Posted by OG1982

I'm merely asking a question. Only one person that has taken offence here and it certainly isn't me.

Originally Posted by OG1982

Didn't think we were supposed to talk politics here? Or is it OK if parties and individuals are not named?

Clearly you were since the disussion of tariffs is too political for your tastes 🤣🤣🤣

[Barbara_C]

Call you what you want but its a tax.

[OG1982]

Originally Posted by 330ci

Clearly you were since the disussion of tariffs is too political for your tastes 🤣🤣🤣

Do you understand how questions work?

My question was an enquiry, not a loaded statement. Please remove the chip off your shoulder and carry on, thanks.

[OG1982]

Originally Posted by Barbara_C

Call you what you want but its a tax.

Exactly what I was thinking.

[BraveBold]

Originally Posted by OG1982

I'm merely asking a question. Only one person that has taken offence here and it certainly isn't me.

Add me to the list.

Not taking offense exactly, but I do not see the purpose of the question other than to somehow “make” the discussion political.

This is a problem with today’s society. Trying to make analytical topics (science, economics, health etc) political and/or partisan.

Discussing the economic impact of tariffs is not politics. It is economics - the economy doesn’t care about political affiliation.

[brandrea]

Originally Posted by 330ci

https://watchestobuy.com/shop/rolex-corvette/ mine was a stainless model but the dial was the same.

These ones were just marketed to Canadians I believe, if they had contract cases I imagine they would be British made as opposed to Canadian made. For some reason the Canadian market seemed more in alignment with UK than the USA. (this example is in a contract case, by whom I don’t know)

I wouldn’t be surprised if there were a small amount of contract cases made in Canada, but would imagine most Canadian sold contract cases would be of UK or US origin.

Most of these watches were military models,sporting modified rebburg movements, small cases by modern standards and not particularly collectible sans a small group of niche watch historians. I recall a Tudor Essex I had as well, they were dime a dozen 10 years ago. Probably can still find them in the $500 range if you keep an eye out. They were fun to collect until the prices shot up. Tough to justify for the prices people ask these days though

Interesting and thank you so much for the share

[OG1982]

Originally Posted by BraveBold

Add me to the list.

Not taking offense exactly, but I do not see the purpose of the question other than to somehow “make” the discussion political.

This is a problem with today’s society. Trying to make analytical topics (science, economics, health etc) political and/or partisan.

Discussing the economic impact of tariffs is not politics. It is economics - the economy doesn’t care about political affiliation.

I'm not going to engage any more on this subject, as to do so would see me breaking the rules.

You wouldn't even be having this discussion, without the political move that made the economic change a possibility.

Enough said, enjoy your discussions.

[brandrea]

Come on guys … it’s been a good discussion let’s not get this thread locked.

I for one learned something from @330ci about Rolex that were made in Canada (or at least partly made here).

Back to the topic and specifically Rolex, I can’t imagine Rolex winding back the clock and making watches elsewhere. They’ve invested heavily to bring everything in house and their marketing / prestige revolves around “Swiss made”.