The mid-July announcement of a sweeping set of tariffs
on Chinese-made goods by the Office of the United States Trade Representative (USTR), part of an escalating trade war between the United States and China, included several lines that break from decades of American precedent, in which art could be imported to the U.S. duty-free.
That long-standing policy had helped the U.S. become the world’s largest art market, accounting for 42% of global sales in 2017, according to The Art Market | 2018, a report by UBS and Art Basel.
But the most recent round of tariffs announced on roughly $200 billion worth of goods cites hand-executed paintings, drawings, and sculptures, among the thousands of items subject to a proposed 10% import duty.
“The U.S. has built its position as an international trade hub by having one of the freest systems of importing and exporting in the world,” said Clare McAndrew, an economist and the author of the UBS and Art Basel report. “While a 10% tariff might not deter a determined individual buyer, it might put vendors off including Chinese works at sales in New York.”
Art and antiques from China accounted for just over $280 million of imports in 2017, according to Commerce Department data, or around 2.7% of the total $10.35 billion in art and antiques imports last year. That’s up from $175 million in 2002, but down from a peak of $403 million in 2015.
Dealers in Chinese art and antiques described the proposed tariffs as misguided and detrimental to cultural exchange, noting it would not serve to protect a domestic industry, since American artists—unlike American factory workers—are not competing directly with Chinese artists. Nor would it meaningfully harm the robust and growing Chinese and broader Asian fine art and antiques markets.
China this year surpassed the United Kingdom as the world’s second biggest art market, with 21% of global sales to the U.K.’s 20%. The country’s thriving auction industry accounts for a full third of global auction sales, just behind the U.S.’s 35% and twice the U.K.’s 16%. Its market is only poised to grow
as the country and its Asian neighbors continue minting millionaires and billionaires at an astonishing clip.
“[The Chinese] don’t really have a desperate need to ship things to the U.S., so it’s wrong-headed in every way,” said James Lally, founder of the New York-based Chinese art and antiques dealership J.J. Lally, and a former director of Chinese works of art at Sotheby’s since 1970. “But it would be very damaging.”
Lally said his understanding is that the proposed tariffs would apply to any work whose “country of origin” is China, since that is the basis on which U.S. Customs and Border Protection (CBP)—the federal agency overseeing imports and exports—classifies where an import is from. He gave an example of someone who has kept a Chinese-made painting in her London apartment for the past few years, which she now wants to send to her sister in America—that item would be subject to the tariff, under this criteria.
The USTR referred questions to CBP; CBP did not provide further clarification on how the proposed tariffs would be enforced or how widely they applied.
Lally said he believes the last time the U.S. government imposed restrictions on art and antiques imports from China was during the McCarthy era, when the U.S. Treasury Department required anyone importing something from China to prove they had not bought it from a Communist. In practice, he said, that often meant the purchase of a simple Chinese tea bowl came with the additional burden of having to drive out to the country home of whichever English lord was selling it, in order for him to sign an affidavit testifying he was not, in fact, a Communist.
“Our government has a knack for these kinds of things,” Lally said.
Peter Tompa, a Washington, D.C.-based lawyer specialized in cultural property issues, said the move breaks with a “long-standing tradition…that the transfer of art is a positive societal thing, something that we want to encourage and not discourage.”
He also envisioned the tariff being levied on Chinese-made art, regardless of its port of origin, and, like Lally, said it will likely give China an even bigger advantage in the Chinese art market, undermining its intended effect.
“If the point is to punish the Chinese, it’s going to backfire,” Tompa said. “It will discourage sales here and bring [the trade] back to China, because things come in duty-free there.”
The U.S. Trade Representative is accepting comments
from interested parties on the proposed tariffs until August 17th, and Lally and others encouraged people affected to air their concerns to policymakers.
Pascal de Sarthe, another longtime dealer in Chinese art who has worked in China since the late 1990s and currently has galleries in Beijing and Hong Kong, said he didn’t think the tariffs would amount to much, either on a micro or macro level. (De Sarthe’s Beijing location is in the process of relocating after being given 13-days notice of its building’s demolition
.) Putting tariffs on a few hundred million dollars worth of art will not significantly reduce the U.S.’s trade deficit with China, he pointed, which is over $152.2 billion
so far in 2018. He also didn’t think it would have a major impact on the Chinese contemporary art or antiques markets, which are largely sold to domestic or regional collectors.
“The core of our business is in Asia,” de Sarthe said. With the lower-priced contemporary works he sells, a 10% tariff, he thought, would not be much of a deterrent, especially since collectors from other countries are used to paying tariffs in the range of 5.5% to 8% to import into places such as Singapore, Switzerland, or France.
“The most expensive works we have are $20,000 or $30,000,” de Sarthe said, referring to the emerging Chinese artists he works with (de Sarthe Gallery also sells secondary market pieces by Chinese and Western artists for prices in the seven figures). “Okay, put a 10% tariff on a work of art; I don’t think that’s going to affect our business.”
He also pointed out several obvious loopholes. Chinese artists can go to America and produce artworks in situ, such as one of his artists who is currently doing at a residency in New York. Digital forms of art are also not specifically mentioned. Instead, the tariff list refers to “paintings, drawings…and pastels, executed entirely by hand, whether or not framed,” “collages and similar decorative plaques, executed entirely by hand, whether or not framed,” “original engravings, prints and lithographs, whether or not framed,” and “original sculptures and statuary, in any material,” as well as “antiques of an age exceeding one hundred years.”
Major auction houses such as Sotheby’s and Christie’s are among the commercial entities that could be most affected. Sotheby’s sold roughly $77 million worth of art and objects over 10 sales since September 2017 in three of its Chinese departments (Chinese Works of Art, Chinese Paintings—Classical, and Chinese Paintings—Modern). Christie’s sold nearly $40 million in Chinese art and objects in March alone, during New York’s Asia Week. Christie’s and Sotheby’s declined to comment.
The list of goods also includes many art supplies, such as canvas and tubes of paint. Jonathan Siegel, vice president of retail art supply store Soho Art Materials, said the biggest effect from the Trump administration’s protectionist trade policy had come from the aluminum tariffs imposed in late March. Siegel said the tariffs had increased the price of aluminum, which his store uses 100,000 feet of a year for stretcher bars, by 25% in the last couple of months, and had also made prices more volatile.
The biggest loser in all of this, dealers agreed, is the American public, which will likely have less exposure to Chinese art.
The tax would “would make it less profitable to bring Chinese works of art to the U.S. for sale,” said Christopher Reynolds, a co-founder of Beijing’s INK Studio gallery, which focuses on Chinese contemporary ink art. “This is really a shame, as it would, of course, distance Chinese artists from America, diminishing the chances for commerce, interaction, and mutual understanding.…Contemporary art, like intellectual exchange, is not useful fodder for trade disputes.”