The US government’s latest tariffs, announced on April 2, sent shock waves through global markets. While most have been paused until July, the impact on global economic forecasts is already being felt. On April 22, the IMF warned of a potential ‘major negative shock’ to the world economy. One of the biggest challenges the art market is facing is uncertainty. As the cultural economist and author of The Art Basel and UBS Art Market Report, Dr. Clare McAndrew, notes, ‘looming recessions, volatile markets, and uncertainty, which we have already seen over the past two years, discourage vendors and high-end purchasing.’ She also thinks the tariffs could affect New York’s premier position in the global art trade, ‘whether through any actual increased costs to trade or even just the perception of it being more administratively complex to do business there.’

Art Basel spoke to three industry thought leaders – Stephanie Armstrong, Managing Partner at the art advisory firm Beaumont Nathan; Thomas C. Danziger, Esq., Managing Partner of the Park Avenue law firm Danziger, Danziger & Muro, LLP; and Fritz Dietl, President of Dietl, a leading shipping and transport company – about the potential deglobalisation of the art market and how different sectors of the trade are responding.

Given the current uncertainty in the art market, what are the main questions your clients are asking, and what are you advising regarding the tariffs?

Thomas Danziger: We’re all working with limited information, but, in some ways, the tariffs have been overshadowed by the financial markets’ dislocation. The art market, like most markets, needs certainty to prosper and that’s been missing in these past couple of weeks. We have put somewhere between USD 50 million and USD 100 million-worth of clients’ artworks into the May auctions in New York – including the big Monet at Christie’s [Peupliers au bord de l’Epte, crépuscule (1891), estimated at USD 30-50 million] as well as many contemporary works. There is a feeling among clients that this may be an opportune time to test the waters, because there haven’t been many great works that came to market in the past 2 years.

Fritz Dietl: The confusion put everything on pause. We all had to take a moment to figure out what is included and excluded from these tariffs. The good thing, for the time being, is that original works of art are exempt under the ‘informational materials’ provision of 50 USC 1702. But that only applies to paintings, prints, and sculptures. Printed materials including photographs and books are also exempt under chapter 49. Furniture, design, objects, antiques, and antiquities are not exempt. All of that material can be imported at a 10% rate, unless it’s from China or Russia. Chinese objects – not works of art ­– are subject to higher tariffs. I just had a client call me who purchased two Chinese objects at TEFAF Maastricht, and I had to advise her that it’s not a good idea to bring them into the US now because the tariff will be 152.5%.

How do you foresee art being impacted in 3 months’ time? Is it possible that the new directive will be applied to cultural property?

Danziger: The problem is that the market doesn’t know because the people making policy don’t know. I wouldn’t even want to hazard a guess as to what the next 90 or 180 days will bring.

Dietl: But having said that, the exemption was passed under the Berman Amendment by Congress – the ‘informational materials’ exemption falls under that and cannot be changed by executive order only. So that’s one thing that gives us a little bit of certainty. The big question really is, if those higher tariffs ultimately do go through, are there going to be reciprocal tariffs, and will they exclude works of art?

Luxury goods as well as furniture are currently subject to the tariffs. How are those markets reacting?

Dietl: We recently had a client pay USD 200,000 to US customs on a big suite of design furniture. Others have stopped shipments and are not importing goods at all. There’s clearly an effect but it’s too early to gauge the extent. What we do know is that the market for Chinese contemporary art in the US shifted to Europe after the 7.5% tariff was put in place. There was a huge boom for a moment and then that pretty much stopped. Those artists are no longer shown in the US because it’s prohibitive to bring their works in.

Danziger: The classifications also dovetail. If you buy a Giacometti table it’s an artwork, but it’s also a utilitarian object so it would be subject to the tariff, as would a Picasso vase.

The IMF is now warning of a significant impact on the global economy. How do you see the wider political situation impacting the art market and clients’ wealth?

Stephanie Armstrong: If you’re in an industry like retail or manufacturing, you’re probably a bit more rattled by the tariffs, and that might carry over to how you feel about spending on art, whereas if you’re in a more service-related business, you might feel less bearish. From our side it’s really been about the wealth effect. We are doing a lot of sales business right now with consigning to the May auctions, almost more than we’ve ever done. The biggest destabilizer is really the uncertainty, which is bad for business because it discourages investment. Overall, we’ve really felt there’s a lack of urgency in the market, a lot of collectors are taking a wait-and-see approach.

Dietl: A lot of people have been holding on to their cash for a while now, anticipating that something is going to happen. They may just want to park some of that cash in a quality artwork. On top of that there’s the declining dollar, so for a European or international buyer, a great picture being bought at an auction in New York just became 20% less expensive.

Global cross-border trade flow across all industries, including the art market, slowed in 2023 and 2024. Are the tariffs contributing towards a deglobalization of the art market and increased regional buying?

Armstrong: If we look back to the recovery of the art market post 2008, it was a very different story. It was a much more pro-global world, and we had an influx of Chinese and Middle Eastern buyers which helped us recover. We’re in a very different situation now and the tariffs could contribute to an existing regionalization [of the market]. It’s also interesting to look back at how many US institutions’ collections were built on the back of a free trade art market. One of the peculiarities of how these tariffs are currently levied is that they are based on where the artwork was created, not the country it’s being shipped from. The idea that Americans can only buy Pollock and Haring tariff free is contrary to the interests of our whole ecosystem.

Danziger: The art market is a global market and American collectors today buy globally. But if it’s more expensive to do so, they’re probably not going to buy objects [in the US], they’ll buy them where it makes economic sense.

According to The Art Basel and UBS Global Art Market Report, 13% of US art goes to China. How is the trade between the US and China and the US and London likely to be affected?

Dietl: If you look at the big art markets – New York and London, which is now shifting to some degree back to Paris – many of these shifts are really happening where there are trade barriers. One reason New York rose so quickly was the concentration of wealth and another was the ease of trade. When you take away one of those two factors, the market will move somewhere without those barriers to trading. There’s a danger that a good part of the market will shift away from New York.

Danziger: The experience of London in the postwar years is instructive here because from 1945 to around the turn of the of the millennium, London was the epicenter of the art market. In the late 1990s, a 5% VAT was applied to works of art for the first time ­– not a huge amount, but it really contributed to the move away from London to the US. The auction houses, for example, will shift their sales to places where there aren’t punitive tariffs. There’s nothing that says New York needs to be the capital of the art world for the next 25 or 50 years. That may well change.

How might regional ties be weakened (e.g., between the US and Latin America) and strengthened in other places (e.g., Asia, the Middle East)?

Armstrong: I see a real opportunity in the Middle East, there has long been a strong axis between London, Paris, Dubai and Abu Dhabi. There’s a good base of collectors there who are hungry to learn and want to be engaged in the market. I can only see this Europe-Middle East axis strengthening.

How might retaliatory tariffs from the EU, Canada, China, and potentially the UK compound a regionalization of the art market?

Armstrong: At the very top end of the market, there’s only a small number of collectors bidding at the 10, 20, 50 million-plus level. A lot of the art market’s buying power still resides outside of the US. And so, if you have a French or German or Swiss collector as one of those people, and suddenly they’re being told that they now must pay a reciprocal tariff for their Rothko, that one bidder is the difference between that work selling for 50 million or not selling at all. As it stands, a collector might buy a Picasso in London and instead of shipping it to New York, decide to keep it in London.

How do you expect the tariffs to affect the low, mid, and high tiers of the trade? And how might different classes of collector be impacted?

Dietl: At the high-end of the market, freeports have been used in Delaware, or Singapore, or Switzerland for generations. It’s more of a problem for lower and mid-end galleries that live off a less wealthy collector base who may not have the same tax opportunities. The ultra-high-net-worth crowd is often insulated, as long as they feel rich. We ship hypercars in the USD 5 million range and one of my companies offered US clients our freeport services to store these cars until the 25% tariff is lifted. Not a single client took them up on the offer because they all can’t wait to get their hands on their new toys. It’s the same dynamic that we see in the art market. Auction houses don’t make money on those USD 50 million or USD 100 million deals. Even for galleries that are involved in those kinds of sales, they’re not their bread and butter. It’s the middle and the lower ends of the market that we need to sustain the art economy, and these are at risk with the uncertainty over tariffs.

We are dealing with a lot of unknowns and it’s clearly a volatile moment. What should we look out for going forward?

Dietl: As we have discussed, the art market is very much tied to the health of the overall market. If a trillion dollars in wealth is eliminated overnight, that will have an impact, maybe not immediately.

Danziger: One interesting thing which we haven’t seen yet in the art market, but we see in other areas, is a growing feeling of anti-Americanism. Canada is not our friend in terms of trade. They’re taking things off the shelves that have American labels on them. It will be interesting to see whether American artists will find disfavor going forward. And it will also be interesting to see whether the number of American collectors visiting European fairs will continue to decline.

Armstrong: Uncertainty is bad for business because it discourages investment. We might see the trade making different calculations on their decisions – they might decide to wait to open that new branch of their gallery or to stall on hiring. These are dynamics that we’ll see play out across the economy that could be very relevant to our market.