Wealthy travel to Europe to dodge tariffs on luxury goods

Jamie and her husband are embarking on a trip to Switzerland in December for a ski vacation, with a twist. The couple is looking to avoid the high U.S. tariffs on Swiss goods by purchasing a luxury watch from Patek Philippe in Geneva. Their target watch is a Nautilus model, with a budget of $50,000 to $75,000. The potential savings from buying abroad, due to the 39% tariff imposed by the Trump administration, could amount to thousands of dollars.

The idea of combining a ski trip with a shopping spree to take advantage of tariff discrepancies has gained popularity among affluent travelers. Erica Jackowitz, a travel advisor, notes that Switzerland, home to luxury watchmakers like Rolex, Piaget, and Audemars Piguet, is a top destination for such tariff-busting shopping trips. Other European countries like France and Italy, known for renowned fashion brands like Hermès and Prada, have also become hot spots for savvy shoppers.

The concept of traveling abroad for discounts is not new, with many people leveraging favorable exchange rates for savings. Luxury travel advisor Jack Ezon has seen a 48% increase in shopping-centric trips this summer compared to the previous year. Milan, Paris, and Madrid are top destinations for fashion and watch purchases, offering potential savings on high-end items like Rolex watches.

Despite the allure of saving on tariffs, travelers must declare their purchases when returning to the U.S. Failure to do so could result in tariffs being imposed on items like Swiss watches or French handbags. The U.S. Customs and Border Protection enforces duties based on factors like the item’s origin, manufacture, and material composition. While there are exemptions for lower-value items, high-priced luxury goods are subject to import costs, including duty, tax, tariffs, and fees.

Travel advisors emphasize the importance of declaring purchases to avoid penalties and ensure compliance with customs regulations. Travelers are entitled to personal exemptions for duty-free items, with specific rules for watches and other goods based on the Harmonized Tariff Schedule.

Despite the potential tariffs upon reentry, buying European luxury goods overseas can still be advantageous due to value-added tax refunds. American travelers can benefit from VAT refunds of over 15%, reducing the customs-related tax burden. Claiming a VAT refund requires specific steps, such as obtaining a refund form from the retailer and processing the refund at designated services in airports.

While the financial savings from VAT refunds and tariffs need to outweigh the overall trip cost, travel advisors are curating experiences around shopping excursions. From visiting luxury boutiques in Paris to trying on watches at Patek Philippe in Geneva, travelers can enjoy a unique shopping experience while saving on high-end items. The combination of discounted prices, VAT refunds, and memorable travel experiences makes these tariff-busting shopping trips a popular choice for affluent travelers.