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SDC Weekly 94; Potential Tariff Workaround; Vintage Watch Renaissance, Ben Clymer Interview
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SDC Weekly

SDC Weekly 94; Potential Tariff Workaround; Vintage Watch Renaissance, Ben Clymer Interview

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kingflum
May 06, 2025
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SDC Weekly 94; Potential Tariff Workaround; Vintage Watch Renaissance, Ben Clymer Interview
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🚨 Hello again, let’s get in to it!

Admin note: Sadly, my unofficial editor was bitten by a venomous snake and is recovering in hospital. Click this link to read online. This ensures you get the most recent edition which may include corrections made after publishing.

If you’re new to SDC, welcome! If you have time to kill, find older editions of SDC Weekly here, and longer posts in the archive here.


📊 Tariffs Again

If you haven’t already watched Teddy Baldassarre’s video on the tariff situation, you should do so. I think he laid out quite a comprehensive analysis of what’s at stake, and he did a great job steering clear of political angles or ‘additional commentary’ in that regard. This has been covered a few times on SDC, but do I have something new to add. Before I do, a quick recap.

While the watch world was gathered at Watches & Wonders in Geneva, the Trump administration announced new tariff rates targeting several countries (e.g. European Union: 20%, Japan: 24%, Switzerland: 31%, China 145%). These numbers are a huge jump from the previous 3-8% duties on imported watches. Right now, there is a 90-day pause - which comes with a temporary 10% flat rate - but everyone’s still anxious about how this will play out.

The background to all this, is that the US is Switzerland's largest export market, and it makes up 19% of all Swiss watch exports. Teddy says in the video: “The United States is responsible for importing 16.9% of total Swiss watch exports compared to China’s 15.9% in second place” - but he’s probably looking at old data - the situation, as of March:

“Just Make Them in America” isn’t so simple

Teddy goes on to react to people suggesting American brands should just make watches domestically; but the reality is that the infrastructure simply doesn’t exist. Sure, maybe the US was once a watchmaking powerhouse, but right now, the US lacks both the specialised machinery as well as the expertise (to produce critical components like movements, hairsprings, and other tiny parts at scale).

Ok, maybe he didn’t completely steer clear of the politics, but he mentioned how even Trump’s own branded watches rely on foreign components – the “Trump Victory” watches use Seiko’s Japanese NH35 movement, and his Golden Tourbillon uses a Swiss-made movement.

Labour/Skills Problem Is Even Worse

Teddy then covers the American watchmaking workforce – or rather, the lack thereof. The US has approximately 4,000 watchmakers right now, and he says this is down 90% from the 1960s! Most of these people aren’t even making new watches at all; they mainly service existing ones (and on top of this, they already can’t meet all the demand).

To make matters worse, guess who is investing the most in training American watchmakers? Yup, foreign companies:

  • The Nicholas Hayek School: Owned by the Swiss Swatch Group

  • North American Institute of Swiss Watchmaking: Partnership with Swiss-based Richemont

  • Lititz Watch Technicum: Created by Rolex in 2001

Rolex even opened a new watchmaking training centre in Dallas last year – a multi-million dollar investment offering American students free tuition, a $1,800 monthly stipend, and a final exam trip to Geneva with all expenses covered.

“You likely recognise a dilemma here,” says Teddy, “as bringing back jobs is commonly cited as a primary benefit of tariffs, yet in the case of the watch industry, it is international brands that are leading the charge in investing in American workers.”

Indeed, Teddy!

So, to state the obvious: for pre-owned dealers, collectors, and service providers, the outlook is … concerning. If this sticks, fewer new watches will enter the US market, supply will shrink, and prices will, inevitably, rise – Teddy thinks this is especially true for vintage pieces which have finite availability (more on this coming up in the next section). Then, aside from the immediate price increases, these tariffs could also potentially hinder planned investment and future jobs in the American watch sector.

Not exactly the desired outcome!

A Potential Workaround?

This is where I wanted to add something to the conversation, courtesy of a WhatsApp message from an SDC subscriber. Here are some tables I put together, laying out a potential solution which could mitigate some of this tariff pain via commercial re-arrangements and negotiations1:

Tariff tables

In simple terms, foreign manufacturers could reduce their invoice costs to American importers (lowering the base for tariff calculations), and the importers could then compensate the manufacturers through separate “royalty payments” for intellectual property or whatever services they want to make up.

In the example, a watch that would face a 27.27% price increase under a 30% tariff environment could instead see just a 9.09% increase through this arrangement - in this example, the burden would be shared as follows:

  • Manufacturer takes a 6.43% hit

  • Retailer absorbs 9.09%

  • Customer pays 9.09% more

As far as I can tell, this wouldn’t be “dodging tariffs” at all - this is essentially a restructuring of the commercial relationships to minimise their impact (though I am not a tax expert, so YMMV).

Share this with your neighbourhood watch dealer, brand, or retailer… maybe they’re already doing it, maybe it’ll help them set up a commercial negotiation with the brands they import - who knows. I am available to help any business who wants help with structuring or commercial negotiations; which is my ‘day job’ after all 😂

—

PS. Just came across this from Apollo - the Fed survey released this week shows how companies are responding to higher tariffs - chart shows the top response is that companies are passing cost increases through to consumers. No surprise, I guess!

Apollo also shared a whole deck of charts about how companies and consumers are responding to tariffs - you can view that here. Finally, if you want even more tariff chat, here’s a podcast episode for you:

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