‘We are in uncharted territory’: Trump’s tariffs scramble art trade - The Art Newspaper

The U.S. art trade found itself navigating "uncharted territory" following the Trump administration's proposal to impose significant tariffs on certain art imports from France. This move, announced by the U.S. Trade Representative (USTR), threatened to add a substantial 25% duty to a range of French art pieces, sparking considerable concern among importers, galleries, auction houses, and collectors.

The proposed tariffs were a retaliatory measure against France's digital services tax, which the USTR deemed discriminatory to U.S. technology companies. Specifically, the USTR targeted Harmonized Tariff Schedule (HTS) codes 9701.10.00, covering "paintings, drawings and pastels, executed entirely by hand," and 9702.00.00, which includes "original engravings, prints and lithographs." These additional duties were proposed in December 2019, with a public comment period concluding on January 14, 2020, and were widely expected to take effect in mid-January.

The implications for the art market are far-reaching. Importers of French art, from major auction houses like Sotheby's and Christie's to smaller independent galleries, faced the prospect of significantly increased costs. Industry experts voiced concerns that these tariffs would not only raise prices for U.S. buyers but could also deter purchases, potentially shifting business to other international art hubs such as Hong Kong or London. A particular point of contention was the potential application of these tariffs to art pieces already purchased or in transit, creating logistical and financial headaches for dealers and collectors alike. The uncertainty created a "chilling effect," prompting some to consider delaying shipments or exploring complex rerouting strategies through non-European Union (EU) countries.

Given this volatile landscape, importers of art and trade compliance officers must take proactive steps to mitigate risks and ensure compliance. It is crucial to:

• Monitor Official Announcements: Stay vigilant for updates from the USTR and U.S. Customs and Border Protection (CBP) regarding the finalization or modification of these tariffs.
• Verify HTS Classifications: Accurately classify all imported art pieces under the Harmonized Tariff Schedule to determine if they fall under the affected categories.
• Consult Experts: Engage with experienced customs brokers and trade attorneys to understand the specific impact on your operations and explore potential strategies, such as duty drawback programs if applicable.
• Evaluate Sourcing and Shipping Strategies: Assess the financial implications of the 25% duty on French art and consider adjustments to sourcing, pricing, or shipping timelines to minimize adverse effects.

The situation underscores the need for robust trade compliance programs and agile supply chain management in an era where geopolitical tensions can rapidly reshape import costs and market dynamics.