European jaunts for high-end shopping by American consumers to bypass tariffs

In the face of rising tariffs on European luxury goods, top-end watches from brands like Patek Philippe and Audemars Piguet, whose prices can soar into the hundreds of thousands of dollars, are becoming increasingly popular choices for affluent Americans during trips abroad.

As a result of the US tariffs, some Americans are opting to purchase these items during their travels, benefiting from an €800 VAT allowance. However, purchases over this amount are subject to tariffs, which can still result in significant savings compared to the premium tariffs in the US.

The trend mirrors the phenomenon observed with US Taylor Swift fans who found it cheaper to see her on a foreign leg of her worldwide tour. The extra expense of traveling to Europe to buy luxury goods is offset by the avoidance of US tariffs, making it an attractive option for many.

It is unclear whether all consumers interviewed by CNBC are planning to declare their foreign purchases to US customs officials upon their return. This ambiguity may stem from a lack of public information on individual customs declarations and variability in consumers' compliance or awareness of customs regulations.

Some luxury European goods are no longer available for import in the United States due to tariffs, further driving consumers to seek these items abroad. A VAT refund of up to 15% can be claimed on items bought overseas, but requires a refund form and processing before departure.

The University of Michigan's final August Consumer Sentiment data showed a 5.7% month-on-month decline, with confidence dropping across income and age groups. The tariffs on European goods may be pushing American consumers to spend their money abroad rather than buy foreign products at home and pay the extra premium.

It is worth noting that an independent watchmaker has announced it will not sell its watches in the US due to tariffs, predicting customers will travel. The tariffs on European goods implemented in August have a 15% levy, while for Swiss products, it increases to 39%.

In conclusion, the trend suggests that US consumers are willing to incur additional travel costs to avoid paying high tariffs on luxury goods. However, it is crucial for these consumers to declare their foreign purchases to US customs officials upon their return to comply with regulations.