Trade War | Trump’s planned duties on Chinese art panned by dealers, museums

The art world is growing anxious about President Donald Trump’s trade war with China.

The administration’s list of USD200 billion in goods targeted for duties includes paintings, sculptures, collages, ceramics and historical collectibles, along with antiques older than 100 years.

Critics of the tariff plan say it will discourage private collectors and dealers from acquiring Chinese art and cultural items, and because museums rely on donations, they and the viewing public will suffer. They also question the effectiveness of trying to spur U.S. production or change China’s trade behavior by targeting art.

“If everything is slapped with a 25 percent tariff, it’s actually going to do a disservice to people here in the U.S.,” said Daniel Chen, director of Chambers Fine Art gallery in New York. “Who are they trying to punish?”

Chen is among more than a dozen individuals and groups filing comments posted on Regulations.gov opposing the tariffs. A hearing is also set for Aug. 20-23 in Washington for companies and groups to weigh in on the proposed duties on more than 6,000 product categories from chemicals to pneumatic tires and circuit boards. The inclusion of art and antiques shows how the escalating trade war affects sectors not typically associated with trade disputes.

China tariffs

The U.S. imposed duties on $34 billion in Chinese products on July 6 and tariffs on an additional $16 billion in goods will take effect on Aug. 23, in response to allegations of intellectual property theft and other unfair trade practices. The administration has identified a further $200 billion in goods for duties and is reviewing whether to increase the rate to 25 percent from 10 percent initially proposed. China has announced further retaliation.

China is the No. 2 art market in the world, accounting for 21 percent of sales by value, behind the U.S. at 42 percent, according to the Art Market 2018 report from Art Basel and UBS. Sales in the global art market reached $63.7 billion in 2017, up 12 percent from 2016, the report said.

Imports originating from China last year included $107.2 million for century-old antiques and $66.6 million for paintings, drawings and pastels by hand, according to U.S. Census data.

Chinese buyers

Not everyone in the art world is concerned. Tad Smith, chief executive officer of Sotheby’s, said on an Aug. 6 post-earnings conference call that while the auction house prefers a stable, growing trade environment, the duty would affect only about 0.1 percent of all its Chinese works of art sold in New York.

“The real buying of Chinese art is in China,” said Larry Warsh, a New York entrepreneur who’s been collecting Chinese contemporary art for more than 15 years.

Still, some dealers and museum directors worry about the ripple effect of the tariff.

Chambers Fine Art in Chelsea represents 25 living Chinese artists, including Ai Weiwei, an international star whose Beijing studio was demolished by Chinese authorities last week. The gallery promotes Chinese artists in the U.S. by staging five annual exhibitions, as well as through collaborating with museums and selling art at fairs, Chen said.

No go

Some projects will never happen if the works become 25 percent more expensive due to the tariffs, he said. He cited an upcoming exhibition of Chinese artist Shang Yang, whose works have sold for as much as $4.9 million at auctions in China. The 75-year-
old Beijing-based artist will make his U.S. debut next month.

“Something like this will never be able to happen if there’s a 25 percent tariff,” Chen said.

The super-wealthy might be able to pay more, but mid-range and smaller collectors will be hurt – as will dealers, who typically can’t sell their acquisitions quickly, said Peter Tompa, executive director of the Global Heritage Alliance. The nonprofit advocates for the interests of collectors, museums and the trade in archaeological and ethnological objects.

“People have the idea that most people who collect art are really rich,” said Kate Fitz Gibbon, executive director of the Committee for Cultural Policy, a New Mexico-
based nonprofit. “Actually, most people who collect art are just passionate.”

Institutions such as the Virginia Museum of Fine Arts are affected in two ways, said Director Alex Nyerges. The tariff would limit museum purchases of Chinese works with its acquisitions endowment, and with fewer pieces of art coming into the U.S., donations also would decline – and 90 percent of its collection has come from gifts, he said.

While the impact of the tariff on China’s trade behavior and the deficit will be minuscule if anything at all, it will hurt the art market trade and ability of museums to serve their educational role, Nyerges said.

“If we don’t have the great works of art to show and tell the story, in this case of the history of Chinese art, then we can’t do our jobs,” he said. “So the real losers end up being the American taxpayers on a tariff that is absolutely senseless.”

Beijing already has a memorandum of understanding restricting the U.S. import of ancient Chinese art, and the proposed duties will only help the Chinese government’s efforts to monopolize the trade, said James Lally, whose Manhattan gallery specializes in works from the country. Importing art and antiques from other nations also will be more expensive because the duty applies to products made in China, he said.

“The only parties to benefit from this policy will be Chinese, Japanese, Singaporean and European collectors who do not have to overcome this hurdle,” Maribeth Graybill, curator of Asian art at the Portland Art Museum in Oregon, said in her written comments posted online. “And, as our president likes to say, ‘They will be laughing at us.”’ Mark Niquette & Katya Kazakina, Bloomberg