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You may or may not get pulled in. If they see that you spend over the limit on a single item you're likely going to get pulled in so they can check what else you may have bought.
Always declare - if you can afford a $1000 watch, you can afford the tax on it. It's not worth the potential shitstorm you face over the next many years.
You pay tax on everything on invoice, including any sales tax you may have paid on that item in the US. You may also pay duty depending on where the watch was made.
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