Introduction
US President Donald Trump's tariffs have sent global financial markets into turmoil. It has been reported that on 10 March the US stock market lost $4 trillion in value due to anxiety over tariffs, and has continued to suffer, as investors, consumers and businesses navigate the confusion. In the immediate term, there has been a pause on these tariffs, with the exception of China, but the duration of this pause is unpredictable and the impact on the art market in particular is uncertain.
Uncertainty
Art market players are desperately seeking clarity on buying, selling and exhibiting artwork with a US nexus. The fears arise from whether such activities will be caught by the tariffs (either those imposed by the US or reciprocally), and, if so, to what extent, with initial figures ranging from 10% in the UK to 54% in China.
Dealers and traders are currently relying on the carve-out under 50 USC 1702(b), Chapters 97 and 49 of the International Emergency Economic Powers Act of 1977 which exempts 'informational materials' including paintings, prints, photos and sculptures, from levies from any country (unless they originate from already sanctioned countries like Russia or China). However, if Trump proceeds with applying a blanket rate of 10% (with additional rates for certain countries) on all goods, including artworks imported to the US, in contradiction to the carve-out, then constitutional questions arise and there is a continuing debate amongst lawyers as to whether artworks will be captured under the tariffs and the ramifications if they are. Consequently, the decision-making of gallerists, collectors and dealers alike has been impacted as they consider the costs and risks of moving and trading artworks.
By extension, even if the artworks themselves are excluded from the levies, the raw materials are not. There is concern about the effect on supply chains, supporting sectors and production of materials, with additional costs on the 'unseen' reach to ancillary packing materials such as the plaster and aluminium required to set up the art fairs themselves. Therefore, moving artworks from the US to exhibit abroad and returning artwork from foreign jurisdictions is likely to result in significantly higher expenses, in an already costly endeavour, and who will bear the cost of the unforeseeable will be subject to discussion. Shows such as the Dallas Art Fair (10-13 April) and Expo Chicago (24-27 April) will prove revealing of art market sentiments in the short-term.
Guidance provided by shippers such as Dietl and reported on Artnet stated that the tariffs are 'based on the country of origin of the artwork, which refers to the country where the artwork was physically produced. This is not necessarily the country of the artist's nationality or the country from which the artwork is shipped'. However, a question posed and quoted in The Art Newspaper by Clinton R. Howell, a New York-based antiques dealer who is president of CINOA and the co-president of the Arts & Antiques Dealers League of America asks, 'Say someone wants to bring in a French-mounted Chinese porcelain vase…Will that person be charged for both the Chinese tariff and the EU tariff?'
Retaliation
The situation has been exacerbated by countries seeking to retaliate against the tariff policies. Canada has promised reciprocal tariffs of 25% under the USMCA trade agreement which includes 'paintings, drawings and pastels, executed entirely by hand'. The legislation does not elaborate on what 'by hand' actually means, nor does it clarify whether other mediums of artwork are subject to the 25% tax. Other countries in the European Union, the United Arab Emirates and Saudi Arabia are also intending to hit back with countermeasures. It should be noted, however, that such tariffs are not entrenched during Trump's first presidency, a 15% tariff was imposed on Chinese artworks in 2019 and subsequently reduced to 7.5% following negotiations, and that such policies could be viewed as deployed for immediate advantage but without subsequent implementation.
Conclusion
For now, the terrain is precarious and subject to change overnight. The recent conversations between experts, exhibitors, shippers, dealers and galleries have been vociferous, but without definitive answers. Some advisers have suggested acting quickly on transactions, including the shipping and logistical elements, whilst the exemptions and the pause remain in place. But the climate is unpredictable, and with other luxury assets like watches and wine being taxed, it may be inevitable that artwork will follow.
In any event, those working within the art world must continue to monitor the situation closely and be ready to adapt with agility.