Took this from the TGN slack.

Vaer guys just posted this in the comments of the H article @Steve B posted in the thread-


reagancook

1 hour ago·edited 1 hour ago

I wanted to weigh in here with a few points of perspective as the owner and operator of an American watch company (I’m the co-founder of Vaer Watches), since it would seem the tariff policy is specifically designed to help companies like my own.

TL:DR: This announcement is extremely disruptive (it essentially evaporates current business profit) but the impact is slightly dulled by the reality that it’s going to hurt almost every other manufacturer (and in some cases, much worse than us).

Here are my top of mind thoughts:

1) As of today, April 3, my understanding is that the announced tariffs are cumulative, meaning that the Swiss Tariff at the end of April will be 41% (10% base + 31% country specific), this is based on yesterday’s notes from WSJ and NYTimes - obviously, this could be wrong, but wanted to point out that clarification at the outset.

2) From a manufacturing perspective, watches are uniquely tariffed, with the tariff rate set as the origin of the movement. So, in this example, if a watch is fully manufactured in China, but the movement origin is Swiss, then the entire timepiece is essentially transformed into a Swiss Watch. In this context, it should be understood that the tariffs don’t solely impact “Swiss Made” watches, but also movement manufacturers like Ronda and ETA. In this way, any Swiss movement (regardless of assembly origin) is about to get a lot more expensive. In this context, for our brand and many of the other independent brands that rely on Japanese Miyota movements the biggest impact to our immediate bottom line is actually the new Japan tariffs.

3) Based on the notes above, I can affirm that from a manufacturing perspective, we are currently pausing production of additional Swiss models (we use Swiss, USA, and Japan movements, and assemble in USA, China, and Switzerland). My gut instinct is that, these tariffs (if maintained) would be devastating to lower-margin Swiss Made mechanical makers like Chris Ward and Farer, because, unlike the big luxury brands, there isn’t enough profit margin to pad against such a massive increase in cost of goods. While we WILL take a hit on the Japan tariffs across the board (even though we’re actively assembling them in America) because the Japan tariffs are lower than Swiss, Japan is essentially gaining ground from this situation.

4) We are a member of the AWA (American Watchmakers Association) and this includes all the big dogs (Rolex, Richemont, Swatch etc.) and I can tell you that there actually is a “watch lobby” and we actively work to press for exemptions and clarifications on a vast number of US government regulations and policies on a monthly basis. I guarantee that this news will be litigated and fought over, and as with previous tariffs and rules their will be industry specific carve outs and clarifications.

5) Does any of this actually help USA watch manufacturers? Obviously, this news is very fresh, but if all the measures stand, then my general takeaway is that it will have a net negative impact on the existing community of American watchmakers. It will definitely hurt the big (already struggling) US budget brands, like Movado, Timex, and Fossil, because their supply chain is very China-dependent (especially in regards to packaging, straps and bracelets, which are not included in the movement origin exemption). Similarly, it will hurt the lower margin indie brands like (Vaer, Lorier, Traska) because many of our Miyota 9000 series automatics will be pushed over the $1000 price point, or else our profit will evaporate due to the new Japan tariffs. Similarly, USA brands will struggle to sell “Swiss Made” or Swiss movement watches anywhere near their previous price-point.

6) What about USA assembly? My brand, Vaer, along with Shinola, are the only large scale watch assemblers in the United States (building tens of thousands of units stateside). The tariff news doesn’t inherently help either of us because the vast majority of the watches we assemble in the USA use foreign made movements, and thus, we are tariffed based on the movement origin when we bring our components in from overseas. I believe Shinola mostly uses Swiss quartz Ronda movements, which as I mentioned above is very bad (unless perhaps they pivot to the ones made in Thailand). For Vaer, we are fortunate to use Swiss, Japan, and USA movements. We are also smaller than Shinola, so our supply chain is more agile, and it’s easier for us to pivot a watch collection from using a Ronda Quartz to Miyota Quartz or an FTS Ameriquartz.

The only reason I could see for this being advantageous to USA assemblers vs. the rest of the world’s watchmakers is if the tariff rate is applied to the retail value vs. manufactured value. For example, if we assemble a watch with an ETA movement in the USA, and the total cost of components is $300, then our tariff on importing that watch kit into America (assuming a 41% Swiss tariff) would be an added cost of $123, making our new COGS $423, doing a 3x retail markup, that would mean a new retail cost of $1,269 (adding $269 for the end consumer).

Alternatively (please note, I’m not 100% sure if this is how it works) if Longines is shipping their $1000 Swiss Made watch into America, then they may be tariffed at the completed retail value, adding $410 to the cost for the end consumer. If this IS in fact the way the new tariff is designed to work, this would benefit US assemblers, but it would be so devastating for all foreign watch manufacturers that I have a hard to time imagining this will take effect in this way.


Anyways, those are my top of mind thoughts! Please reach out if you have any questions or feedback (admittedly, it’s a very complicated topic). - Reagan

Whilst this is a valid topic to be discussed on the forum, it has been locked temporarily whilst The Admin Team prepares a post / topic on the subject of US Tariffs.

Once posted, the topic will be unlocked.

Please bear with us.

Guy
The Admin Team

A new topic has been posted by @Kip in our News Forum;-

USA Tarrifs - How CW will handle

This topic is now unlocked. You are free to discuss the subject regarding economics but political discussion is still not permitted.

Guy
The Admin Team

Well done to the admin team for reacting so quickly and even sourcing and stating the Cw position on the situation.

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

This topic is now unlocked. You are free to discuss the subject regarding economics but political discussion is still not permitted.

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?

The good news is the Swiss, and other countries, can quickly resolve this issue by removing the tariffs that are now being reciprocated. Hopefully there will be swift resolution.

I can't see how this move will help you in all honesty the tariffs to Japan and to Switzerland (main suppliers of movements) are bumping up significantly. It actually will make watches inherently more expensive even if making watches with overseas movements in the us.
The idea is to try and move manufacturing within United States. So either the swiss Japanese movements needs to have manufacturing within the US or brand new in house movements need to be developed in the US.
Either way all current watch brands will be affected with a potential 25% tariffs from Japan or 31% tariffs from switzerland (not including if the base 10% is added)

Rusty Strings wrote: ↑Thu Apr 03, 2025 10:13 pm The good news is the Swiss, and other countries, can quickly resolve this issue by removing the tariffs that are now being reciprocated. Hopefully there will be swift resolution.

Could you show me a source for the “fact” that the Swiss charge a 61% tarrif on exports from the US? (The chart Donald Trump shared yesterday does not count as a source)

kev017 wrote: ↑Thu Apr 03, 2025 10:38 pm

Rusty Strings wrote: ↑Thu Apr 03, 2025 10:13 pm The good news is the Swiss, and other countries, can quickly resolve this issue by removing the tariffs that are now being reciprocated. Hopefully there will be swift resolution.

Could you show me a source for the “fact” that the Swiss charge a 61% tarrif on exports from the US? (The chart Donald Trump shared yesterday does not count as a source)

I believe the tariffs against Switzerland are31%, not 61%. Swiss import tariffs on agricultural imports is in the neighborhood of 30%. Non-agricultural goods are much lower, I will freely admit to that. I'm not a fan of tariffs at all as I believe in free trade, but overall free trade does not exist due to tariffs. We'll all be better off when we have something more akin to free trade with all sides reducing or eliminating import tariffs.

https://www.trade.gov/country-commercia ... rt-tariffs

I am personally unhappy about this as I was going to pull the trigger on ordering my first CW next week (and paying import duties on it) but I understand the reasons behind what is taking place.

Rusty Strings wrote: ↑Thu Apr 03, 2025 10:59 pm
I believe the tariffs against Switzerland are31%, not 61%. Swiss import tariffs on agricultural imports is in the neighborhood of 30%. Non-agricultural goods are much lower, I will freely admit to that. I'm not a fan of tariffs at all as I believe in free trade, but overall free trade does not exist due to tariffs. We'll all be better off when we have something more akin to free trade with all sides reducing or eliminating import

The chart shows “Tarrifs charged to USA” as 61%. As you point out above, this is clearly not true (in the literal sense). The truth is much more nuanced due to the complexity of tarrifs. I believe that 99% of US items imported in to Switzerland do not attract tarrifs. I’d love to see some maths on how that 61% was derived.

Sorry to hear this has interfered with your purchasing decision.

I had an email from microbrand(?) Yema earlier which stated, for the time being at least, that they are absorbing the impact of recently announced tariffs and keeping US prices static. It will be interesting to see whether this is realistic or feasible in the long term, ceteris paribus.

I never really understood how the import duties on watches worked. It has always been overly complex. The only certainty is there will be a sudden price hike for us in the US who want to buy a CW. How much of a hike will be impossible to say just yet. Good thing I bought my (likely) last CW for quite a while last week!

ajax87 wrote: ↑Fri Apr 04, 2025 1:39 am I never really understood how the import duties on watches worked. It has always been overly complex. The only certainty is there will be a sudden price hike for us in the US who want to buy a CW. How much of a hike will be impossible to say just yet. Good thing I bought my (likely) last CW for quite a while last week!

This is worth a watch Alex, if you’re curious. Mark from Long Island Watches works through what I believe to be some real life examples. Includes some print outs of how watches attract tarrifs (even things like the number of jewels in the watch seem to make a difference?)

https://youtu.be/IVwIyciIIiI