Trade war impact on watches?

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stewie

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Let me start by saying the intent of this thread is not to bash politics, politicians, or decisions made by one party vs another. I truly hope it does not take that direction. I'm posing a specific question I've been wondering about for a couple of days.

Has anyone seen any articles or read anything that discusses the potential implications the trade war with China will have on watches. I'm particularly wondering since there are so many microbrands either located in China or using factories in China? I've been swamped at work, barely keeping my nose above water, so I haven't had a chance to research this myself. We also may not be far enough into this to know the answer yet, but I have been wondering about it.
 
I don't think we are there yet. Listening to Mnuchin yesterday or Thursday, can't remember which day it was, he kept saying we are not at a trade war yet, but that it could come, but we are in the negotiating stages with China still. Also listening to Mr. Wonderful, Kevin O'Leary, he talks about China needing to negotiate or they will be greatly hurt by these tariffs, and I agree with him on this. Just my opinions here.
 
I think you're right that we're not really there yet and don't know what the impact would be. As I mentioned I haven't really been able to stay on top of this.
 
https://www.businessinsider.co.za/c...t-risk-from-trump-trade-war-with-china-2018-4

5ac5dcc287826b2c008b45cd-960-720.jpg


http://www.businessinsider.com/citi-chart-countries-at-risk-from-trump-trade-war-with-china-2018-4

5589d853eab8eae07b634e48-960-480.jpg


2018_04_06-Europe-chart-of-the-week-550x295.jpg


https://www.cnnmoney.ch/shows/livin...e-exposed-trade-war-us-or-china-says-indosuez

SWITZERLAND MORE EXPOSED TO TRADE WAR THAN THE U.S. OR CHINA, SAYS INDOSUEZ WEALTH MANAGEMENT CHIEF ECONOMIST

As the United States and China get closer to a trade war, the two superpowers will not be the biggest losers if such a conflict eventually occurs and spreads globally. Countries that rely on trade the most will take the hardest hit, warns Marie Owens Thomsen, global chief economist at Indosuez Wealth Management. And among those nations is Switzerland. Exports and imports represent 120 percent of the Swiss GDP, while it's only 37 percent for China and 27 percent for the U.S.

https://perspectives.pictet.com/wp-content/uploads/2018/04/2018-04-06-Europe-Chart-of-the-week-Trade.pdf

6 April 2018 | FLASH NOTE - Europe chart of the week – Trade

Any estimate of the economic costs of protectionist measures, let alone trade wars, is subject to uncertainty given the complexity of global supply chains. A common assumption is that new tariffs on exports will produce small direct effects on GDP growth but more significant indirect effects in the event of escalating trade conflicts, including on domestic investment. Europe looks particularly vulnerable to such indirect effects given its relatively high degree of openness to trade. For all the talk about ‘Euroboom’, about one quarter of euro area GDP growth in 2017 was driven by net trade.

Euro area exports amounted to 47% of GDP in 2017 compared with 12% in the US. Importantly, the euro area is also highly integrated into global value chains. The import content of exports, which the OECD calculates as the foreign value-added as a share of total gross exports, indicates just how dependent euro area countries are on the global manufacturing cycle driving investment at home. By this measure, euro area countries look more exposed to fluctuations in global trade than most advanced economies, with foreign value-added accounting for 25-27% of German, Italian, French and Spanish exports, compared with 15% of US exports. Countries with higher foreign value-added include China (29.5%) and smaller emerging market economies.

The US alone accounts for 13% of euro area exports, followed by the UK (12%), China (7.5%) and Switzerland (6%). Even if the EU is exempted from US tariffs, the latter could weigh on activity through other channels. The impact on the price and volume of intermediate inputs could be amplified by third countries adopting retaliatory measures. Last but not least, a sustained downturn in business confidence could hit investment eventually.
 
Actually Stewie I never thought about the impact on watches from Asia?:hmm: Let's see how the negotiations go before we panic about a trade war.
 
More importantly, will this affect the price of General Tso’s chicken?
 
More importantly, will this affect the price of General Tso’s chicken?

lnquiring minds, like yours Bob, want to know.....

General Tso's chicken imported from China - $1,287.00 per pint

General Tso's chicken from China Bowl Restaurant downtown - $3.99 per pint


General-Tsos-Chicken-.jpg
 
Are the Chinese fakes, going to escalate in cost ?
 
Trade war impact on watches?

Screw it. Let the trade wars begin. Buy everything you can now!! It’s the perfect excuse to tell your significant other.


Sent from the White House on the tax payers dime.
 
I love me some Gen T Chix!!! I too wondered how all this COULD affect our hobby. Shall be interesting....
 
Sorry, I am at fault for hijacking this tread .....back to the Chines tariffs and watches...
 
no tariffs on swiss-asian-russian watches imho

reason- no domestic watch industry to " protect " unless...

escalation to full blown trade war...and universal tariff levied on all imports from euro zone and asia


since prediction and prophesies of war, famine, depression can be difficult... am running to supermarket to pick up a roll of aluminium wrap to make a new tin foil crown... will report back when i receive strong signal from URANUS
 
Let me start by saying the intent of this thread is not to bash politics, politicians, or decisions made by one party vs another...

I agree and hoped so yet there will always be a jackass that does, if not in words, and ignore the forum rules.
 
TL;DR: no impact.


Long form:

My job involved importing a small portion of our products - about 5 to 10% so speaking only about the stuff I'm familiar with...

The tariffs first floated involve non-component items - i.e. steel sheet, bar and plate and aluminum extrusions and ingot. Oversimplified but not too bad. Hence somebody making a sheet steel door frame in Tennessee is going to take it right in the teeth as steel sheet makes up a fair portion of their cost. Somebody extruding aluminum thresholds will be less impacted but mostly because we already had a punitive tariff on Chinese aluminum.

Also the previous aluminum tariffs did not apply to aluminum as a component. If you were importing aluminum door track with a wood door, brass latch and inlaid picture of Elvis the track didn't trigger the high tariff.

I don't know if the new ones will have any significant changes to implementation or component products but that ignorance is in exchange for my retirement and I'm happy with that bargain. From my new position it appears much ado about not so much - except for those poor guys with the sheet steel products. Typically the harmonized tariff system isn't considered recreational reading but here 'tis if anyone's interested:

https://www.usitc.gov/tata/hts/bychapter/index.htm

The product designation is in the form xxxx-xx-xx and usually isn't obvious. The tariffs listed to the right show exceptions. Do not panic when you see the numbers in column 2 - if memory serves they apply to North Korea and Cuba so are generally not in play anyway.

Watches will not be impacted by anything thus far announced. Even if they were specifically targeted I doubt much would happen to US prices unless the tariffs started topping 20%. Mostly because standard tariffs have less of an impact than the dollar's strength from day to day and are also insignificant compared to the importer's mark up. The typical 200.00 watch costs around 25 bucks fob so a 20% bump would result in a cost of 30.00 which amounts to piffle compared to the sell price anyway. It's usually cheaper to absorb than to reprint price books. (25.00 based on my memory of court records from the AP v SWI suit on the "Tri-Mix 'Royal Oak'" wherein SWI and Lior were heavily motivated to document as high a cost as possible as the award was based on profit).

My markups were no where near that number but watches have historically been a high profit item on a percentage basis - most especially from China. How else to explain the hundreds of Chinese catalog watches spawning new brands by the pantload on kickstarter each and every one of which offers luxury product at a low price? Anybody with an internet connection is suddenly a watch manufacturer - all it takes is a web site and an email account. Once upon a time it benefitted from a plane ticket but that's pretty much optional these days. Which is a pity because I liked having my travel paid for.
 
Oh man, good point. I sure don't want General Tso to lose any business! He makes some mighty tasty chicken.

Some trivia: restaurants in Beijing still show Peking Duck on the menu despite Peking being changed to Beijing a very long time ago.

No such thing as Beijing duck so far as I could tell but whatever it was it was both popular and tasty.
 
Thanks for the post. Interesting take on the 20% markup not being that much for items with a large margin.

Since a a lot of the micro brands outsource to China, I do wonder what a 20% cost increase would do for there business. for a small startup on Kickstarter etc, They May not be able to pass it off to the customer and they probably can’t absorb it either.

If this proceeds it will be interesting and for a lot more than just watches.




TL;DR: no impact.


Long form:

My job involved importing a small portion of our products - about 5 to 10% so speaking only about the stuff I'm familiar with...

The tariffs first floated involve non-component items - i.e. steel sheet, bar and plate and aluminum extrusions and ingot. Oversimplified but not too bad. Hence somebody making a sheet steel door frame in Tennessee is going to take it right in the teeth as steel sheet makes up a fair portion of their cost. Somebody extruding aluminum thresholds will be less impacted but mostly because we already had a punitive tariff on Chinese aluminum.

Also the previous aluminum tariffs did not apply to aluminum as a component. If you were importing aluminum door track with a wood door, brass latch and inlaid picture of Elvis the track didn't trigger the high tariff.

I don't know if the new ones will have any significant changes to implementation or component products but that ignorance is in exchange for my retirement and I'm happy with that bargain. From my new position it appears much ado about not so much - except for those poor guys with the sheet steel products. Typically the harmonized tariff system isn't considered recreational reading but here 'tis if anyone's interested:

https://www.usitc.gov/tata/hts/bychapter/index.htm

The product designation is in the form xxxx-xx-xx and usually isn't obvious. The tariffs listed to the right show exceptions. Do not panic when you see the numbers in column 2 - if memory serves they apply to North Korea and Cuba so are generally not in play anyway.

Watches will not be impacted by anything thus far announced. Even if they were specifically targeted I doubt much would happen to US prices unless the tariffs started topping 20%. Mostly because standard tariffs have less of an impact than the dollar's strength from day to day and are also insignificant compared to the importer's mark up. The typical 200.00 watch costs around 25 bucks fob so a 20% bump would result in a cost of 30.00 which amounts to piffle compared to the sell price anyway. It's usually cheaper to absorb than to reprint price books. (25.00 based on my memory of court records from the AP v SWI suit on the "Tri-Mix 'Royal Oak'" wherein SWI and Lior were heavily motivated to document as high a cost as possible as the award was based on profit).

My markups were no where near that number but watches have historically been a high profit item on a percentage basis - most especially from China. How else to explain the hundreds of Chinese catalog watches spawning new brands by the pantload on kickstarter each and every one of which offers luxury product at a low price? Anybody with an internet connection is suddenly a watch manufacturer - all it takes is a web site and an email account. Once upon a time it benefitted from a plane ticket but that's pretty much optional these days. Which is a pity because I liked having my travel paid for.
 
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