Cost and value often don't match. The used price of an Apple Watch reflects the value buyers attribute to it (of course also modulated by the number of used Apple Watches that are available for purchase). Apple's trade-in price is largely set such that Apple can sell it on the used market with a (small) profit. It is thus reflects the value of a used Apple Watch.
Thinking that it (the trade-in price) indicates the production cost of an Apple Watch assumes that Apple would sell new Watches as used/refurbished (and thus sees the trade-in program and their own production chain as two alternative sources for their 'refurbished program'). But I really don't think Apple is feeding new Watches into its refurbished channel in any significant numbers (returns, trade-ins, and surplus stock when new models are released are feeding that channel). Therefore the trade-in price is really about value and not cost.