Newsflash: Potential 25% Tariff on Art Work of Chinese Origin

September 6, 2018

Dear Valued Customer,

Please be advised, due to unresolved trade negotiations between the United States and China, the U.S. Trade Representative (“USTR”) has imposed an additional 10 percent (10%) ad valorum duty on some imported items. Since the initial proposal and implementation of these additional duties, the President has directed to USTR to consider increasing the proposed level of the additional duty from 10 to 25 percent, and increase the list of commodities subject to this duty. The proposal is under a consideration by the administration, and subject to change and revisions before the final rule is enacted, current indications are that numerous artwork classifications will be included. The comment period for this latest proposed increase ended on September 6 and we are awaiting for the release of final ruling and list of products that will be affected.

If the proposed duties go into effect, all Chinese-origin artwork, antiques, and collectors’ items entering the U.S. will be subject to 10 to 25 percent duty on the declared value of the items. Included on the list are all products classified in chapter 97 of the U.S. Harmonized Tariff Schedule, “Works of Art, Collectors’ Pieces and Antiques.” The duties only apply to products of Mainland China and are based on the country of origin, not country of export. An example: a Chinese painting shipped from France to the U.S. would be subject to the additional duty. A French painting shipped from China to the U.S. would not be subject to the additional duty.

It is our understanding that Chinese articles imported for exhibition at museums or acquisition under a Permanent Exhibition Bond (“PEB”), will be exempt from additional duties; however, U.S. Customs and Border Protection requires that bond shall be given for the payment of all duties and fees which may accrue should any of the articles be sold, transferred, or used contrary to the provisions of a PEB within 5 years after the date of entry. If Customs follows through on the increased bonds that are required under the regulations, bond amounts could be as high as 10 to 25 percent of the total value of the imported items under the PEB and this would result in significantly higher bond fees required for those PEB entries.

Masterpiece anticipates that the additional duties will not apply to artwork previously exported for exhibition and returned in the same condition, as these items are classified under a special duty-free provision.

Masterpiece is currently utilizing the duty-free provisions available to museums and non-profit institutions and will continue to monitor the potential duty and bond requirement increases while keeping our clients informed. Please reach out to your local Masterpiece representative for more information, questions, or concerns.

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Thank You,

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