Making Sense of Canada, Mexico Tariffs in the Art Market
On March 4, 2025, the White House officially announced the commencement of supplemental 25% ad valorem tariffs on products from Mexico and Canada above the existing rates. Among other sectors of the economy, the art market is affected by this to the extent it potentially eliminates the customary and longstanding exemption for art and sculpture from customs duties. In the official Notices published on March 6, 2025 there is an exemption to the new tariffs that could be read to exclude those artifacts, but the language is drawn from a different statute and is not internally consistent with the ordinary customs regulations. This puts any art imported from Canada or Mexico at risk of a catastrophic economic imposition. Although the President reversed course on March 6, 2025 and announced that many (but not all) of the tariffs would be paused until April, the publication of the intended tariffs answers some questions but raises others about their intended scope.
Finally, to the extent that the new tariffs take effect and are intended to tax artwork, the authority recited by the President likely does not, in fact, empower him to raise tariffs on art based on his stated justifications. Put another way, under recent COVID-era guidance by the Supreme Court, the delegation by Congress to the President to do certain things based on a declared emergency should not extend to taxing art based on a stated emergency related to illegal drugs. There is no rational connection between the two, and the various statutes’ text would have to be stretched to reach that conclusion. Judicial review seems likely and indeed may be necessary to sort this all out.
None of this is intended as a commentary on the stated policy of the current Administration, tariffs generally, or the legacy of the Tariff Act of 1930 (Smoot-Hawley)—a political and economic discussion for others to take up. Rather, the following explores what it means for the art market and whether there is legal authority to implement it.
Tariffs and Art
Congress and the President have broad authority to tax goods imported into the United States in the form of duty, commonly referred to as tariffs when they are individualized on goods from a specific country. For the first half of United States history until the Constitution was amended to permit (non-proportional) personal income tax, customs duties were the primary revenue source for the United States government.
Art has long been exempt from customs duties, based on the long-standing policy that art and cultural exchange should be encouraged and that duties would infringe on that exchange.
The Harmonized Tariff Schedule (HTS) sets forth duties on various goods. HTS Section 9701, 9702, and 9703 set the rate for painting, drawings, pastels, mosaics, engravings, prints, lithographs, original sculptures and statuary as “free.” The manner in which the art must be declared (even when no duties are owed) depends on its value.
2025 Mexico and Canada Tariffs
As stated by the White House in a “Fact Sheet” dated February 3, 2024 (prior to the promulgation of any notice in the Federal Register), these tariffs “charge Mexico and Canada a 25% Tariff on ALL products coming into the United States.” Putting aside that tariffs are not charged to the exporting nation, this broad intention to levy an additional 25% duty on “ALL” all imports did not initially identify any exemptions. The White House issued a virtually identical “Fact Sheet” on March 3, 2025.
On March 6, 2025, the Administration published two Notices in the Federal Register by the Department of Homeland Security (DHS), Customs and Border Protection (CBP). The first is entitled “Notice of Implementation of Additional Duties on Products of Canada Pursuant to the President’s Executive Order 14193, Imposing Duties To Address the Flow of Illicit Drugs Across Our Northern Border,” (the Canada Tariff Notice), and imposes 25% tariffs on most goods imported from Canada. See Federal Register Vol. 90, No. 43, 11423. The other is entitled “Notice of Implementation of Additional Duties on Products of Mexico Pursuant to the President’s Executive Order 14194, Imposing Duties to Address the Situation At Our Southern Border,” (the Mexico Tariff Notice). See Federal Register Vol. 90, No. 43, 11429. The Mexico Tariff Notice imposes effectively identical tariffs as the Canada Tariff Notice, with differences for energy imports not addressed here.
The Canada and Mexico Tariff Notices recite a number of statutes as authority for the President’s actions. First, they point to a sequence of Executive Orders, ‘‘Imposing Duties to Address the Situation” at the respective borders. Those Executive Orders, 14193 and 14194 among them (several functionally identical Orders were made in sequence in February and March of this year), declare and expand previous declarations that there is a national emergency at each border due to the use of fentanyl and other illegal drugs, and the asserted failure of Canada and Mexico to interrupt that illicit importation.
That emergency declaration was, in turn, made under the auspices of the International Emergency Economic Powers Act (50 U.S.C. §§ 1701, et seq.) (IEEPA), the National Emergencies Act (50 U.S.C. §§ 1601, et seq.) (NEA), section 604 of the Trade Act of 1974, as amended (19 U.S.C. § 2483, which authorizes changes to the HTS), and section 301 of title 3, United States Code (the general delegation authorization, the President himself does not literally have to perform the act). Both the Canada and Mexico Tariff Notices recite these statutes as well.
The IEEPA authorizes the President broadly to restrict, among other things, the importation of “any property in which any foreign country or a national thereof has any interest by any person, or with respect to any property, subject to the jurisdiction of the United States.” 50 U.S.C. § 1702(a)(1)(B). That power is expressly limited, however, and does not extend to “the importation from any country, or the exportation to any country, whether commercial or otherwise, regardless of format or medium of transmission, of any information or informational materials, including but not limited to, publications, films, posters, phonograph records, photographs, microfilms, microfiche, tapes, compact disks, CD ROMs, artworks, and news wire feeds.” 50 U.S.C. § 1702(b)(3).
Both the Canada and Mexico Tariff Notices quote the language of the IEEPA at 50 U.S.C. § 1702(b)(3) to exclude those same items from the new 25% tariffs. Does that therefore exempt any art or sculpture from the tariffs? It should, because the exemption would default to the “duty provided in the applicable subheading,” which in the case of art and sculpture is “free.” At 25%, however the stakes are too high simply to assume. For one, neither the Canada nor Mexico Tariff Notices reference the applicable HTS provisions for art and sculpture.
That leaves the collector and importer in a very difficult position. Duties are assessed at the point of entry, and Customs and Border Protection has the authority to levy them and restrict import of any goods before the duty is paid. In practical terms, that means a work of art may be assessed a 25% duty by the inspecting officer, who has the power to stop it from coming into the United States. An argument about the regulations’ and statutes’ respective interpretations is not of much use in that moment.
Nor is it even clear if the last-minute announcement that some of the tariffs would be paused would affect this analysis. The White House announced later on March 6, 2025 that automotive-related products would not be subject to the increased duty, and then later than any goods imported under the 2022 United States Canada Mexico Agreement (USCMA), the revision to NAFTA from that year--but that also would not necessarily impact whether art and cultural property is covered.
As a shrewd article in The Art Newspaper pointed out, however, even if finished artworks fall within the exemption, any materials imported to make those artworks would not. For larger scale productions—particularly prints and illustrations—that remains a key business risk even to works created or produced entirely within the United States.
Challenge or clarification?
Reasonable minds can disagree whether the proposed tariff is sufficiently clear to be administered (which itself could justify declaratory relief by affected parties). That necessarily presumes, however, that the tariff is lawful in the first instance. It may well not be as applied to art. Administrative action can be challenged under the Administrative Procedures Act, 5 U. S. C. §§ 551, et seq. The APA permits judicial review of final agency that, inter alia, exceeds its authority, or is arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law. The President is exempt from the APA, but this is a DHS action.
There is a strong argument to be made that the Canada Tariff Notice and the Mexico Tariff Notice are in excess of statutory authority. Here, some recent COVID-related litigation is instructive. Under the Biden Administration, the President invoked the Higher Education Relief Opportunities for Students Act of 2003 (HEROES Act) to depart from the existing provisions of the Higher Education Act of 1965 (Education Act) to establish a student loan forgiveness program that would have canceled about $430 billion in debt principal. The President argued that he had authority to do so because of the provisions of the HEROES Act that allowed him to “waive or modify any statutory or regulatory provision applicable to the student financial assistance programs” in the event of a war or other military operation or national emergency.” COVID, he argued, was just such a national emergency. The Supreme Court disagreed, holding that the President’s plan was a fundamental change, not the waive[er] or modif[ication]” permitted by the HEROES Act. Biden v. Nebraska, 143 S.Ct. 2355, 2368-69 (2024). Further, thanks to the demise of the Chevron doctrine, any of the foregoing ambiguities are not entitled to any deference under the asserted expertise of the agency (DHS). See Loper Bright Enterprises v. Raimondo, 603 U.S. 369 (2024).
Here, the question is what authority the IEEPA and NEA confer on the President. The IEEPA authorizes the regulation of property, but textual coherence requires the conclusion that the property or article must be related to the emergency. This example actually proves the flaw of the counterargument. Taxing art has nothing whatsoever to do with a reduction in the flow of illegal drugs.
Moreover, the tariff is almost facially arbitrary. Fine art has absolutely nothing to do with illicit drugs, and the stated emergency’s repeated declaration and suspension appears unconnected to any actual change in conditions at the border between February and March. Absent an administrative record to support those shifting justifications, the proposed tariff itself may be arbitrary or capricious.
It is unknowable whether these tariffs will ever enter into force as promulgated, but the uncertainty warrants judicial review, at the very least. Collectors and art market participants should consider their next move advisedly.
