We need to talk tariffs

[greenc]

We need to talk tariffs, and I don't mean debate them in a political way, I'm talking about practical information concerning jackets coming from Japan and Europe.

Per the Rose Garden speech it looks like all goods coming from Japan are now assessed a 34% tariff, and anything from Europe looks to be 20%.

This same conversation is being had regarding Swiss timepieces. The annual Watches & Wonders show is happening in Geneva when most of the major and independent brands from Europe and the Far East are exhibiting the new pieces.

Swiss imports are now subject to 31%, which is going to destroy the Swiss watch industry.

Practically speaking, does anyone have specific data on whether or not there are certain category exemptions?

If the Administration's goal is to return manufacturing to the U.S., then it could be argued that certain segments of goods have never enjoyed U.S. manufacturing (timepieces as an example) at scale so they could possibly be exempt.

What are we thinking everyone? Adding 31% to an Aero, or RMC, or Thedi, etc is going to seriously be no fun.

 

[Fonzie]

So, the price of a new customised Aero shipped to the US would around US$1,400 and a Thedi around $2,500, right? That’s a big price hike!!

 

[dannyk]

Not good. I’ll avoid politics. But as you touched on two thoughts. Ok maybe and it’s a HUGE MAYBE; eventually manufacturing picks back up here in the States. We don’t really know that it will, but let’s pretend it does for sure. That still takes years to actually happen. So maybe here in the US we do start making some of our own products we collect here or making more of them. Yet a lot of the materials needed to make them would still be imported passing cost onto consumers. Then as you said the US either has no interest en masse in certain products or has no history of producing them….so for those things you’ll have no choice to pay. Or I guess the other choice is to go without.

 

[RedBird]

I’m concerned about the recent administrations stance on incoming goods. The US has pivoted away from a manufacturing base to a consumer and services sector. I’m not saying we can’t bring some manufacturing back, but it will take years, decades. And in the meantime time it will hurt the consumer on nearly every level.

While I am hoping the tariff announcement today was a press released ‘warning’, one that could be used to advance negotiations, I’m cautious they could be with us long-term.

I also don’t usually get into political posts, but there are also items we all appreciate and enjoy that will be adversely affected.

 

[TLW '90]

We need to talk tariffs, and I don't mean debate them in a political way, I'm talking about practical information concerning jackets coming from Japan and Europe.

Per the Rose Garden speech it looks like all goods coming from Japan are now assessed a 34% tariff, and anything from Europe looks to be 20%.

This same conversation is being had regarding Swiss timepieces. The annual Watches & Wonders show is happening in Geneva when most of the major and independent brands from Europe and the Far East are exhibiting the new pieces.

Swiss imports are now subject to 31%, which is going to destroy the Swiss watch industry.

Practically speaking, does anyone have specific data on whether or not there are certain category exemptions?

If the Administration's goal is to return manufacturing to the U.S., then it could be argued that certain segments of goods have never enjoyed U.S. manufacturing (timepieces as an example) at scale so they could possibly be exempt.

What are we thinking everyone? Adding 31% to an Aero, or RMC, or Thedi, etc is going to seriously be no fun.

Except there was Waltham, Elgin, US TIME / TIMEX, and a couple others.
It's been over 50 years, but we used to make a lot of watches and the American made railroad grade pocket watches were once the most accurate personal timepeaces available.

 

[Guppy]

So, the price of a new customised Aero shipped to the US would around US$1,400 and a Thedi around $2,500, right? That’s a big price hike!!

For that much, fly to Europe for a vacation, pick up the jacket, wear it home.

 

[photo2u]

Not good. I’ll avoid politics. But as you touched on two thoughts. Ok maybe and it’s a HUGE MAYBE; eventually manufacturing picks back up here in the States. We don’t really know that it will, but let’s pretend it does for sure. That still takes years to actually happen. So maybe here in the US we do start making some of our own products we collect here or making more of them. Yet a lot of the materials needed to make them would still be imported passing cost onto consumers. Then as you said the US either has no interest en masse in certain products or has no history of producing them….so for those things you’ll have no choice to pay. Or I guess the other choice is to go without.

There is hardly any labor force in America to produce products at the level of the Japanese. The quality of the mid level companies producing jackets is not very desirable for some serious collectors. I am not a big fan of Schott because some of the better products are produced for exportation. I known they are going to feel this impact, and not in a good way. I feel for Johnsons, Vanson and Lost Worlds because they are one of the few who produce excellent products. I truly hope this does not wipe the lost worlds out of business. Keeping my fingers cross for them.

 

[Fonzie]

Please do that! It’ll help those small businesses and you can’t get Made in USA Aero or Thedi jackets anyway!

 

[photo2u]

For that much, fly to Europe for a vacation, pick up the jacket, wear it home.

Not much to see in Scotland or England. Personally, will never visit any of the United Kingdom countries again. My money will be better spent in Eastern Europe. More to see, cheaper and safer. Now, Greece, that is nice!

 

[Benny Holiday]

Aussies have been there for some time. With the AUD at 63 US cents, plus 10% Goods and Services Tax (like VAT in the UK), to buy a stock Aero or Thedi (or anything from overseas, of course) already costs us nearly 50% more. They're simply out of my reach now. An Aero Dustbowl, for instance, at 1,080 British pounds equates to $2246.91, only $150 short of what I make per fortnight after tax. With soaring electricity costs, Council land rates, fuel, groceries, you name it, that's a huge luxury I can't justify.

 

[greenc]

I agree with what everyone has said thus far, thank you for the thoughts.

If we use Swiss watches as an example - given that there are extremely robust secondary and vintage markets - a $10,000 USD Rolex Submariner will now be approximately $13,100 USD, which is obviously a significant increase for what any of us at the practical, consumer level could deem an arbitrary tax.

As such, buyers will begin forgoing the retail price and instead look to the secondary market, however, the secondary sellers will be raising their prices given the laws of supply and demand.

Think of a U.S. buyer for a $400K Lamborghini - I can't imagine they'd want or even accept an increase of $100,000 over the sticker price given the 20% tariffs on European goods.

If any American auto manufacturer - outside of Ford - has an American-made answer to a European supercar now's the time to unveil it.

Ford did a beautiful job with the re-release of the GT40 a few years ago but they were made in limited quantities and were exceptionally expensive. The current GT is a gorgeous car, but I think an argument can be made that an American muscle car doesn't have the finesse of a European supercar, however lovely each may be in it's own right.

The 2025 Corvette and Mustangs are beautiful but they lack the slickness of a 911 or a Ferrari, Maseratti, etc, in my opinion.

As this pertains to jackets, Vanson makes a beautiful product but they patterns don't seem to fit me as well as RMC. Lost Worlds also creates gorgeous pieces, but I don't believe Stu can scale to the degree he'd need to in order to satisfy U.S. demand if overseas jackets became prohibitively expensive.

 

[photo2u]

Except there was Waltham, Elgin, US TIME / TIMEX, and a couple others.
It's been over 50 years, but we used to make a lot of watches and the American made railroad grade pocket watches were once the most accurate personal timepeaces available.

Benrus still available. But over 1.5k. At that price, I take a Canadian marathon for a third of the price. However, I am done with watches. There is only one Zenith in my list for the past 3 years. I have not purchased it because I DO NOT NEED IT. If for what ever crazy reason I buy it, I will get it used in NY when I visit my friend at 47th.

 

[greenc]

@TLW '90 agreed that even one watch is a luxury purchase these days in terms of whether or not anyone actually needs a mechanical or quartz timepiece when everyone has a phone.

The same could maybe apply to jackets - how many does a person actually need? I could wear just one but it's more fun to own a few and all the more fun to scheme new ones. If these tariffs actually land I think we're going to see potentially segment breaking stress applied to all manner of products, jackets, watches, clothes, cars, etc.

We'll see if any of this gets walked back - as of yet I've not read specifics on how any of this is actually supposed to work.

 

[Aloysius]

Just a little note, and this is not a partisan thing (the awful policies in question predate this administration and were likely bipartisan) though it probably helps us understand what will happen.

Tariffs actually helped destroy the American clothing manufacture industry. As everyone here knows very well, the US isn't really a big producer of wool or other textiles (same thing applies to leather). However, cloth has a massive tariff, which is enough to make manufacturing clothing non-viable. There is a carve-out in the Farm Bill that slightly compensates clothing factories like the former Hickey-Freeman factory for their tariff costs, but that's a bandage after the fact and doesn't apply to everyone.

The new tariffs on top of that might be the killing blow.

Again, not a political statement, just me speaking as a former econ reporter. (Although I've actually been meaning to do a long-form piece on this as it relates to clothing manufacture because it's a field the general public is ignorant about.)

 

[2-or-more]

I would love to order a new Vanson but because I am located in Europe I would get a decent hit of counter tariffs as well. The situation Is screwed in my opinion.

 

[Fonzie]

No one wins with this tariff across the board strategy, but it definitely looks like the US residents will be the worse off by far from this policy.

It’ll take them between 7 to 15 years for US local manufacturers to catch up with creating the infrastructure needed to produce locally what they currently import, and in the meantime they have to raise prices as well for locally produced goods to keep up from the lose of profits emerging from the decline on local demand and the increased prices of what they need to import until they’re ready to produce locally (stagflation)

Stagflation will be apparent very soon and recession in the US is guaranteed in the short to mid term.

Investors are fleeing fast the American stock market and looking for alternative international markets and other safe assets in commodities like oil, gas, cattle and gold for example, that has had a massive 13% price hike in the past few short months since the election.

US tariffs will be more benefitting to other countries than to the US, as they will look for alternative exporting options.
This happened a few years ago here in Australia with the wine industry and China.
When China imposed heavy tariffs to Australian wines vecsuse of political issues, local wine makers were initially worried as it was by far their biggest importer, but they opened up to other countries quickly and the wine industry actually grew as consequence of this retaliatory policy, backfiring for China that achieved nothing in return, apart from more expensive Australian wines which their citizens had to pay extra.

Tariffs are just another form of tax on the residents of a country, and bullying your friends and allies is not a brilliant idea in the long term, as they’ll move away from you and make other alliances.

“Misery acquaints a man with strange bedfellows”, China, and emerging large manufacturing economies like India will be the big winners here.

Isolationist economic policies don’t work in a globalised economy.


P.s: There, I said it. Where’s my Nobel Prize in economics?

 

[MadCat]

Was eyeing a new Schott for myself and just noticed the price increased over $300 in one day. No thanks.

 

[Fonzie]

Was eyeing a new Schott for myself and just noticed the price increased over $300 in one day. No thanks.

Schott probably uses a lot of imported materials to be able to produce their jackets in the US. Now they have to pass on those extra costs to the consumer.
Real time proof that tariffs are a just a tax on the consumer.
American produced goods also increase prices automatically with this policy.

Be safe everyone, it’s a jungle out there.

 

[MadCat]

Schott probably uses a lot of imported materials to be able to produce their jackets in the US. Now they have to pass on those extra costs to the consumer.
Real time proof that tariffs are a just a tax on the consumer.
American produced goods also increase prices automatically with this policy.

Be safe everyone, it’s a jungle out there.

Exactly. I’ll wait for a sale.

 

[Fonzie]

Exactly. I’ll wait for a sale.

Sale prices in a few months now will be what the jacket cost two days ago. It’s price gouging.