jkbarnes wrote: ↑Fri Apr 04, 2025 1:11 am

tikkathree wrote: ↑Thu Apr 03, 2025 10:03 pm

jkbarnes wrote: ↑Thu Apr 03, 2025 9:09 pm

Feel free to discuss this inherently political topic without discussing politics. Let’s see how this shakes out.

Dew, if I understand this correctly the only way this will (and I'm paraphrasing what I read of Potus' claims about tariffs) be good for American jobs is in the case of the watch wholly manufactured in the USA?

I think responding to your question in any meaningful way falls under the guise of political discussion. All I know is prices are going up, and I can’t margins that’s good for business for CW. We’ll see how this plays out, with Smoot-Hawley in 1930 as a reference.

I wondered if there was a historian among us that remembers the Smoot-Hawley Tariff Act of 1930. That ill conceived piece of legislation lasted until 1934 when it was replaced by the Reciprocal Trade Agreement. As for those that might need a refresher, Smoot-Hawley came on the heels of the 1929 stock market crash & did little to instill confidence in Wall Street. Basically , Smoot-Hawley added 20% to already high tariffs. During those four years in which Smoot-Hawley existed, trade between ( export & import) the United States & Europe was reduced by two-thirds of pre 1929 levels. So, if anyone was wondering, Americans were willing to keep it for four years & it was very much a factor of the prolonged Great Depression. My grandparents were married in 1930, which my grandmother told me wasn’t a great time to be starting up in life. Their only consolation was everyone was in the same boat, no one had any money. How quickly people forget the lessons of the past!

Delmar

As I am not an expert on international trade I can only comment based on what I have read, and my uneducated interpretation of it. It would seem that these reciprocal tariffs are being used to "encourage countries doing business with the USA to lower their tariffs on USA produced goods."

According to the International Trade Administration website Switzerland charges 30.4% on agricultural goods and a whopping 137.7% on dairy products.

While non-agricultural goods from MFN countries only faced a simple average tariff rate of 1.3% in 2020, duties of 30.4% were applied to agricultural goods on average, and these rose to 137.7% for dairy products

I am assuming this would mean that any USA based farm business that wanted to export dairy products or other agricultural products to Switzerland would be hard pressed to do that due to these huge tariffs. While dairy and agricultural products can be considered necessities as they are foodstuffs, watches are want to have and not need to have products for the most part. I have five watches and don't need another one, even though I might want another one.

It seems that a simple solution to the Swiss watch industry problem with these reciprocal tariffs would be to lower their tariffs on necessities and the USA would then most likely reciprocate.

I don't have a crystal ball, but it seems likely that the Swiss watch industry as big as it is for Switzerlands economy will have a lot to say to their government about negotiating with the USA on lowering tariffs. All of the major Swiss brands are affected by these tariffs. I don't see the likes of Rolex, Longines, Brietling, Omega etc. etc. sitting on their hands and not putting huge pressure on their government to resolve this.

Most people can wait to buy their new watch until this is resolved and it won't affect them in any real way. The small watch companies based in the USA who import their watch parts and watches are going to unfortunately feel the squeeze until this is resolved. Hopefully it will be negotiated and resolved in a matter of days or weeks and not months.

It seems that the price of foreign watches entering the US will attract big tariffs on the full cost price making US watches more attractive. The issue of foreign tariffed movements being tariffed at cost price only seems again to make US watches more attractive relative to Swiss etc as laid out in the original post.

The Japanese and Swiss movement manufacturers may consider opening US factories in the long term. Surely this is very analogous to the Mexican made engines in Ford trucks scenario. Hamilton moved to Switzerland. They could move back!?

This is pretty bad for CW assuming they don’t want to open a US factory or make their own movements at scale so only get hit with 10%.

LambethCW wrote: ↑Fri Apr 04, 2025 9:00 am It seems that the price of foreign watches entering the US will attract big tariffs on the full cost price making US watches more attractive. The issue of foreign tariffed movements being tariffed at cost price only seems again to make US watches more attractive relative to Swiss etc as laid out in the original post.

The Japanese and Swiss movement manufacturers may consider opening US factories in the long term. Surely this is very analogous to the Mexican made engines in Ford trucks scenario that Trump wants to stop. Hamilton moved to Switzerland. They could move back!?

This is pretty bad for CW assuming they don’t want to open a US factory or make their own movements at scale so only get hit with 10%.

- What watch brands in the US actually make and assemble full watches?

- I highly doubt Japanese and Swiss movement manufacturers will even consider US factories. The cost to do this is massive. Lack of skills etc.

- You say of CW “so only get hit with 10%.”. That’s not true. CW watches will attract a 31% import tariff.

@kev017
Absolutely, but the op does mention someone who makes movements.

I mean they want car companies to move factories. Surely that’s at least as difficult but may work in the long term.

Ah is there an original 21%? I was just reading the top line 10% I had seen.

There’s many headlines saying it all crazy but I’ve read other stuff including in the Times yesterday that seemed to suggest there was a problem that needed fixing.
Incidentally, I’m 54 and my entire pension is invested in the US and is tanking as we speak. I’m relying on my instinct that this will work itself out.

Unfortunately the US will suffer here in the short term, as the new tariffs aren't based on reciprocal terms at all. They're based on a percentage representation of trade imbalance - ie $ revenue from a country buying US goods / $ spent importing goods from that country to the US, with a minimum level of 10% (which explains why there's a 10% tariff on a land mass almost entirely inhabited by penguins). The actual tariffs paid in each direction probably made it too hard to quickly put something together.

I'd expect the numbers to be negotiated down significantly over the next few weeks and months.

I don't want to stray into politics, but I really do wonder if the President has a point, especially with regard to VAT. I wonder if anyone more learned in economic theory could comment. Please delete my comment if it steps over the mark.

I can see how the absence of VAT on foreign sales of UK and EU goods makes a real difference to the price of those goods and could be regarded as dumping. (a real economics term).

I got to the link below as it was referenced in the AI response for "Dumping Economics Definition"

https://www.investopedia.com/terms/d/dumping.asp

This is the first paragraph in the article

Dumping is when a country or company exports a product at a lower price than its domestic sale price. In the context of international trade, dumping is often considered an unfair pricing strategy. Because dumping typically involves substantial export volumes of a product, it often endangers the financial viability of the product's manufacturer or producer in the importing nation.

Given the above comments about Swiss tariffs of 31%, will a US manufacturer importing and using Swiss movements have to pay a tariff on the movement cost anyway, which will increase the retail price of any watch using such a movement.

edit. I originally thought my spell checker wanted two r's in "tarriff"

jkbarnes wrote: ↑Fri Apr 04, 2025 10:43 am

JAFO wrote: ↑Fri Apr 04, 2025 10:41 am Given the above comments about Swiss tarriffs of 31%, will a US manufacturer importing and using Swiss movements have to pay a tarriff on the movement cost anyway, which will increase the retail price of any watch using such a movement.

My understanding is yes.

Expand this further - the US has desires to on-shore chip manufacturing, even celebrating a Taiwanese company wanting to build foundry capabilities in the US. It won't happen overnight, and semiconductor technology moves pretty quickly. The real kicker is pretty much all advanced semiconductor production is entirely dependent on machinery produced only in the Netherlands...

Which is why when the current administration get into the detail, they'll soon need to back track on the unimagined complexities of trying to apply blanket tariffs.

I do wonder if it's just smoke and mirrors. The art of the deal? Not sure.

kev017 wrote: ↑Fri Apr 04, 2025 9:27 am

LambethCW wrote: ↑Fri Apr 04, 2025 9:00 am It seems that the price of foreign watches entering the US will attract big tariffs on the full cost price making US watches more attractive. The issue of foreign tariffed movements being tariffed at cost price only seems again to make US watches more attractive relative to Swiss etc as laid out in the original post.

The Japanese and Swiss movement manufacturers may consider opening US factories in the long term. Surely this is very analogous to the Mexican made engines in Ford trucks scenario that Trump wants to stop. Hamilton moved to Switzerland. They could move back!?

This is pretty bad for CW assuming they don’t want to open a US factory or make their own movements at scale so only get hit with 10%.

- What watch brands in the US actually make and assemble full watches?

- I highly doubt Japanese and Swiss movement manufacturers will even consider US factories. The cost to do this is massive. Lack of skills etc.

- You say of CW “so only get hit with 10%.”. That’s not true. CW watches will attract a 31% import tariff.

I agree Kev.

If the chap in the White House thinks such countries will bend the knee, economically speaking, he will be disappointed.

Economically speaking it will be interesting to see how quickly the USA goes into recession.

Neil

jkbarnes wrote: ↑Fri Apr 04, 2025 10:43 am

JAFO wrote: ↑Fri Apr 04, 2025 10:41 am Given the above comments about Swiss tarriffs of 31%, will a US manufacturer importing and using Swiss movements have to pay a tarriff on the movement cost anyway, which will increase the retail price of any watch using such a movement.

My understanding is yes.

Yes, this is what is expected at the moment. But things could yet change or be "clarified" to be something different.