Trump's Tariffs
Musings on chaos
I just couldn’t stay away! 😁
Jokes aside, I was itching to carve out some time and share some thoughts on this topic - there will be a lot more to come, I’m sure… but here’s a starter for ten.
Estimated reading time: ~13 mins
Just as the excitement was brewing at Watches & Wonders in Geneva, Trump did what Trump does best: blew up the status quo with a trade policy hand grenade which has rightfully sent the entire Swiss watch industry into a bit of a tailspin. The 31% tariff in the US, on Swiss goods (including watches), has left brand executives, retailers, and collectors alike wondering what the fvck happens next.
That’s because the US has been Switzerland’s biggest export market since 2021 (overtaking China):
First off, it helps to understand that the full 31% won’t instantly be tacked onto the retail price of your next Rolex. As I understand it, the 31% applies to the declared import value of the goods, which tends to be lower than the final retail price.
For example, if a watch wholesales at $5,000 and retails at $10,000, the 31% tariff would add 31% of $5000 ($1,550) to the import cost; not $3,100 to the retail price as some people have been insinuating in articles and on Instagram. Yes, this is still a a hefty chunk of change, but this distinction does matter when we’re projecting potential price increases.
What makes this situation particularly confusing to analyse, is that we are dealing with multiple moving pieces: currency fluctuations, global supply and demand considerations, multiple retail markets, retailer margin compression, and the psychology of luxury buyers in an uncertain market. That’s a lot of stuff to ‘mash up’ into one easy answer… so let’s be clear: nobody knows where this is headed.
Still, there are a few things to explore, so let’s get into it.