Personal Finance
Wealthy travel to Europe to dodge tariffs on luxury goods
Visitors and salesmen stand at the booth of Swiss luxury watchmaker and jeweler Piaget, during the “Watches and Wonders Geneva” luxury watch fair, on April 1, 2025.
Fabrice Coffrini | Afp | Getty Images
Jamie and her husband are traveling to Switzerland in December for a ski vacation. But hitting the slopes isn’t the only motivator: The couple say they are also trying to sidestep steep U.S. tariffs on Swiss goods.
They intend to buy a luxury watch — a Patek Philippe Nautilus — from the watchmaker in Geneva, Jamie said, as a present for her husband’s birthday.
Their budget for the watch: $50,000 to $75,000.
If successful, buying abroad may save them many thousands of dollars relative to purchasing an imported Swiss timepiece. The Trump administration on Aug. 7 imposed a 39% tariff on Switzerland, among the highest rates in the world.
The couple say they had been thinking of a ski getaway in the Swiss mountains for some time. But the possibility of scoring a Patek watch at a hefty tax discount “was a motivator and added bonus,” said Jamie, a 42-year-old New Yorker. (She asked to use only her first name for privacy reasons.)
Interest among the affluent to travel for tariff-busting shopping sprees has spiked in recent weeks, said Erica Jackowitz, a travel advisor to wealthy clientele.
Switzerland — which is home to other high-end watchmakers like Rolex, Piaget and Audemars Piguet — is the top destination, she said.
Other European nations like France and Italy, where renowned fashion brands like Hermès and Prada are based, have also emerged as hot spots, Jackowitz said.
The European Union faces a 15% U.S. tariff on most goods. That levy also took effect in August. (Switzerland is not part of the EU.)
The specter of European tariffs has persisted since April, when President Donald Trump initially announced “reciprocal” tariffs on the EU and Switzerland (among more than 100 other countries) before delaying them.
‘Every dollar counts’
A Christian Dior luxury store in Paris on July 22, 2025.
Cyril Marcilhacy/Bloomberg via Getty Images
Tariffs add a new wrinkle to a well-worn concept: traveling abroad with an eye to discounts.
Many people travel to take advantage of favorable exchange rates, for example. And many Americans booked trips to Europe for Taylor Swift concerts in 2024, finding it more cost-effective to pay for airfare, hotel rooms and concert tickets abroad than to see the artist at home.
“That really set off people’s mindsets that you can get things at better prices in different places,” said Jack Ezon, a luxury travel advisor based in New York.
He’s seen the share of shopping-centric trips among his clientele jump 48% this summer relative to 2024.
Italy, Milan, Paris and Madrid have been the top destinations, said Ezon, founder and managing partner of Embark Beyond. Fashion and watches are the top draws, he said.
“Every dollar counts when you’re getting these kinds of tariffs,” Ezon said.
Take the example of an imported Rolex as an illustration of potential cost savings, according to an analysis by FlavorCloud, a cross-border logistics firm.
A Rolex Lady-Datejust watch in Oystersteel and Everose gold retails for $11,300, before taxes. After tariffs, the same watch is estimated to cost about $15,700 — or $4,400 more, according to the FlavorCloud analysis.
The analysis assumes the tariff cost is passed to the end consumer. Many economists believe companies will pass on at least some of the cost.
Rolex spokesperson Virginie de Meuron declined to comment.
The price tag for luxury Swiss watches can sometimes swell to $500,000 or more — in which case the potential tariff savings can be huge, Jackowitz said.
Any ultimate savings may depend on factors like an item’s country of origin and duties that may have already applied before reciprocal tariffs took effect, trade experts said.
‘There is no way around that’
Celal Gunes/Anadolu via Getty Images)
Of course, the gambit could backfire.
Travelers must declare any items they acquire abroad and bring back to the U.S., according to U.S. Customs and Border Protection.
In other words, travelers aren’t supposed to keep their purchases a secret — at which point that Swiss watch or French handbag could be hit with tariffs. Total duties would depend on factors like where a particular good was acquired and manufactured, and what it’s made of.
More from Personal Finance:
How wealthy investors use ETFs to skirt capital gains taxes
Trump immigration policy may be shrinking labor force
Roth IRA vs. Roth 401(k) contributions
While there are exemptions from customs duties in certain cases, especially for lower-value items, high-priced luxury goods would likely be treated exactly the same as if shipped: subject to all normal import costs including duty, tax, tariffs and fees, according to trade experts.
“A $4,000 handbag, a $10,000 watch, you will have taxes you need to pay and they will be assessed at the border based on the declaration,” said Rathna Sharad, co-founder and chief executive officer of FlavorCloud.
“There is no way around that,” she said.
Person walking past the Patek Philippe boutique on Rue du Rhône on Aug. 2, 2025 in Geneva, Switzerland.
Robert Hradil | Getty Images News | Getty Images
Ezon and Jackowitz, the travel advisors, are aware of this potential snafu, and say they tell travelers they should declare their purchases. Failure to do so could risk penalties like fines, forfeiture of the item and losing membership in the Global Entry program from U.S. Customs and Border Protection.
But customs agents do have some discretion to levy tariffs or not, trade experts said. From a practical standpoint, it’d also be hard for agents to ascertain if clothing or jewelry worn by a traveler was indeed a new purchase overseas, they said.
Each traveler gets a personal exemption that allows them to bring back $800 worth of items duty-free, according to a U.S. Customs and Border Protection spokesperson. The exemption is $1,600 from the U.S. Virgin Islands, American Samoa and Guam.
Families traveling together can combine these exemptions, the CBP spokesperson said. Duties on watches and other items are calculated based on the Harmonized Tariff Schedule, considering components like the movement, case and strap, they said.
The value of buying overseas
Travel agents and customs experts say there are still merits to buying European luxury goods overseas, even if they are slapped with tariffs upon reentry to the U.S.
Largely, that’s because of refunds that American travelers can get on the area’s value-added tax.
The upshot for travelers: That VAT refund can be hefty, often more than 15%.
Getting a VAT refund yields a double benefit, Sharad said: Americans get a discount courtesy of that refund, and also reduce any customs-related tax bills (because the tax would be owed on a lower declared value).
Additionally, the base rate for merchandise is often cheaper overseas, Ezon said.
An artisan works in the Montex workshop at the Chanel SA 19M campus in Aubervilliers, France, on Jan. 20, 2022.
Benjamin Girette/Bloomberg via Getty Images
Travelers should be aware that there are certain steps to take to claim a VAT refund, experts said.
For example, the retailer will need to provide a refund form at the point of sale to travelers, who generally need to have their passports handy. Travelers will then need to process the refund; these designated processing services are generally available at airports upon departure, experts said.
From a financial standpoint, potential savings — whether on the VAT or tariffs — would need to outweigh the overall cost of a trip to justify it.
But travel advisors are also planning experiences around the shopping.
Jackowitz, for example, is putting together a shopping-focused trip to Paris for a client and bundling a visit to La Galerie Dior into the itinerary.
For the New York couple traveling to Geneva, getting an appointment at Patek Philippe to try on different watches — along with the ski vacation — was part of the allure.
“The ability to be able to get the watch that we want at a significant discount to what it’d cost us in the U.S., and have the experience of the trip and the day of getting the watch — the combination of those things is what pushed us over the edge,” said Jamie.
“I imagine it’ll be a lot of fun.”
The Federal Reserve held interest rates steady at the conclusion of its policy meeting on Wednesday.
In what could be Jerome Powell’s last as chair before President Donald Trump’s yet-to-be-confirmed nominee Kevin Warsh takes the helm, central bankers maintained the federal funds rate in a target range of 3.5% to 3.75%.
Inflation has surged since the war with Iran began, leaving policymakers with limited room to act, according to Sean Snaith, the director of the University of Central Florida’s Institute for Economic Forecasting. “We’re in a kind of suspended animation — between Iran and the Fed transition,” Snaith said.
Before the oil shock, inflation was holding above the Fed’s 2% target but not worsening. Now the jump in energy costs could have longer-term inflationary effects, economists say.
For Americans struggling in the face of higher gas prices and overall affordability challenges, the central bank’s decision to keep interest rates unchanged does little to ease budgetary pressures. “The cavalry isn’t coming anytime soon,” Snaith said.
How the Fed decision impacts you
The Fed’s benchmark sets what banks charge each other for overnight lending, but also has a trickle-down effect on many consumer borrowing and savings rates.
Short-term rates are more closely pegged to the prime rate, which is typically 3 percentage points above the federal funds rate. Longer-term rates, such as home loans, are more influenced by inflation and other economic factors.
Credit cards
Most credit cards have a short-term rate, so they track the Fed’s benchmark.
After the Fed cut rates three times in the second half of 2025, the average annual percentage rate has stayed just under 20%, according to Bankrate.
“Without Fed rate cuts, there’s not much reason to expect meaningful declines anytime soon, so carrying a balance will remain very expensive,” said Matt Schulz, chief credit analyst at LendingTree.
Mortgage rates
Fixed mortgage rates, on the other hand, don’t directly track the Fed but typically follow the lead of long-term Treasury rates.
Concerns about how the Iran war will impact the U.S. economy have already pushed the average rate for a 30-year, fixed-rate mortgage up to 6.38% as of Tuesday, from 5.99% at the end of February, according to Mortgage News Daily.
That leaves homeowners with existing low mortgage rates “feeling stuck,” said Michele Raneri, vice president and head of U.S. research and consulting at TransUnion. “Mortgages, more than any other credit type, work on a churn,” she said, referring to how a dip in rates can boost borrowing activity.
Student loans
Federal student loan rates are also fixed and based in part on the 10-year Treasury note, so most borrowers are somewhat shielded from Fed moves and recent economic uncertainty.
Current interest rates on undergraduate federal student loans made through June 30 are 6.39%, according to the U.S. Department of Education. Interest rates for the upcoming school year will be based in part on the May auction of the 10-year note.
Car loans
Auto loan rates are tied to several factors, including the Fed’s benchmark. Because financing costs remain elevated, new car buyers are taking on longer loans to keep their monthly payments manageable, according to the latest data from Edmunds.
Even so, with the rate on a five-year new car loan near 7%, the average monthly payment on a new car rose to $773 in the first quarter of 2026, an all-time high.
“Car buyers are in a tough spot right now because they’re getting squeezed from both ends: high sticker prices and high interest rates, with neither showing any signs of letting up,” said Joseph Yoon, consumer insights analyst at Edmunds.
“Until the rate picture shifts, buyers will keep stretching loan terms to make payments work, which only adds to the total cost of ownership down the road,” Yoon said.
Savings rates
While the Fed has no direct influence on deposit rates, the yields tend to be correlated with changes in the target federal funds rate. So, although rates on certificates of deposit and high-yield savings accounts have fallen from recent highs, they are holding above the annual rate of inflation.
For now, top-yielding online savings accounts and one-year CD rates pay around 4%, according to Bankrate.
“Yields on high-yield savings accounts and certificates of deposit are down from their peaks of a few years ago, but they’re still strong compared to what we’ve seen for most of the past decade,” Schulz said.
Milan Markovic | E+ | Getty Images
The average tax refund is 11.2% higher this season, compared with about the same period in 2025, according to the latest IRS filing data.
As of April 10, the average refund amount for individual filers was $3,397, up from $3,055 about one year ago, the IRS reported on Friday.
The IRS data reflects about 114 million individual returns received, out of about 164 million expected through Tax Day. Next week’s filing update is expected to include data through the April 15 deadline.
President Donald Trump‘s 2025 legislation, rebranded to the “working families tax cuts,” was a key talking point for Republicans on Tax Day.
With the November midterm elections approaching and Republicans defending slim majorities in Congress, many GOP lawmakers have highlighted Trump’s tax breaks and higher average refunds.
Meanwhile, affordability has been top of mind for many Americans amid rising costs of gas, electricity, food and other living expenses.
For filers who expected a refund this season, nearly one-quarter, or 23%, planned to use the funds to pay down credit card debt, and the same share said they would save the payment, according to the CNBC and SurveyMonkey Quarterly Money Survey, released in April. It polled 3,494 U.S. adults at the end of March.
Who benefited from Trump’s ‘big beautiful bill’
“It’s been a great tax season for the American people,” many of whom have benefited from Trump’s tax breaks, Treasury Secretary Scott Bessent said during a White House press briefing on Wednesday.
More than 53 million filers claimed at least one of Trump’s “signature new tax cuts” — the deductions for tip income, overtime earnings, seniors and auto loan interest — the Department of the Treasury also announced on Wednesday.
Those filers, who claimed the deductions on Schedule 1-A, have seen an average tax cut of over $800, according to the Treasury. Tax cuts can trigger a higher refund or reduce taxes owed, depending on the filer’s situation.
Some filers who itemize tax breaks have also seen benefits from the bigger federal deduction limit for state and local taxes, known as SALT. Trump’s legislation raised that cap to $40,000, up from $10,000, for 2025.
The latest SALT deduction limit change is expected to primarily benefit higher earners, according to a May 2025 analysis of various proposals from the Tax Foundation.
The Treasury has not released data on how many filers have claimed the SALT deduction during the 2026 filing season.
Traders work at the New York Stock Exchange on April 16, 2026.
NYSE
U.S. stocks climbed to record highs on Thursday against a backdrop of war, an oil supply shock and economic forecasts warning of stunted growth amid a protracted conflict.
Many investors may be thinking: Why?
Largely, it’s because the stock market is a barometer of what investors think will happen in the future, rather than an assessment of the present day, according to economists and market analysts.
Investors are essentially shrugging off the Middle East conflict as a blip that will be resolved relatively quickly, they said.
“The stock market isn’t trying to price what’s happening today,” said Joe Seydl, a senior markets economist at J.P. Morgan Private Bank. “The stock market is always trying to price what the world is going to look like six to 12 months from now.”
Why stocks have been ‘resilient’
The S&P 500, a U.S. stock index, fell about 8% in the initial weeks of the Iran war, from the start of the conflict on Feb. 28 to a recent low on March 30.
But stocks have rebounded since then, erasing all losses since the beginning of the war. The S&P 500 closed at an all-time high on Thursday — about 11% higher than its nadir at the end of March. That followed a record close on Wednesday.
“The market has remained very resilient in the face of the war and has rallied strongly on the prospect that it will be resolved,” said Mark Zandi, chief economist at Moody’s.
A ship waits to pass through the Strait of Hormuz following the two-week temporary ceasefire between the US and Iran, which is conditional on the opening of the strait, in Oman on April 8, 2026.
Shady Alassar | Anadolu | Getty Images
And while investors cheered the possibility of a diplomatic off-ramp to the conflict, the temporary ceasefire has appeared tenuous, with the U.S. and Iran each accusing the other of breaking the agreement.
Nations haven’t been able to reach a peace deal ahead of the ceasefire’s end. Vice President JD Vance said U.S. officials left peace talks in Pakistan over the weekend after the Iranian delegation refused to agree to American demands not to develop a nuclear weapon.
The markets ‘have memory’
Ultimately, the stock market is signaling a collective belief that tensions will ratchet down, the war will end in the near term and oil flows through the Strait of Hormuz will normalize, economists said.
That’s largely because investors have been conditioned to believe that President Donald Trump will back off if the economic pain becomes too intense, economists said — the so-called “TACO” trade, shorthand for “Trump always chickens out.”
“Investors strongly believe — and have been conditioned to believe — he’s going to stand down, find a way to pivot, declare victory and move on,” Zandi said.
Trump has pushed back on the notion of backing down, framing his brinkmanship as a savvy negotiating tactic.
Economists pointed to a recent example of this dynamic: in April 2025 during so-called liberation day, when the Trump administration levied a host of tariffs on U.S. trading partners.
Within days — after the stock market had cratered more than 12% — Trump announced a 90-day pause on those tariffs. Stocks then saw one of their biggest daily rallies in history following Trump’s reversal.
Investors remember that Trump often de-escalates geopolitical shocks — which is why they’ve seized on positive headlines that hint at progress in peace talks, for example, Seydl said.
“The markets have memory,” Seydl said.
AI stocks and the ‘tech boom’
Traders celebrating at the New York Stock Exchange on April 15, 2026, as the S&P 500 closed above the 7,000 level for the first time.
NYSE
There are other factors underpinning market resilience during wartime, economists said.
One is the investors’ enthusiasm for artificial intelligence and technology stocks, which account for almost half of the S&P 500’s market capitalization, Zandi said.
“Those stocks run on their own dynamic independent of anything, including the war in Iran,” Zandi said. “I think we would have been down a lot more and it would have been harder for us to recover had it not been for the very, very optimistic perspectives on AI.”
We’re in the middle of a “tech boom” — and investors are likely to remain optimistic until they think the tech cycle has run its course, Seydl said.
More broadly, stock investors are essentially making a bet on the future earnings growth of a company — and the earnings backdrop has been “pretty solid,” Seydl said.
Consumer spending appears to be stable, for example, economists said. And companies are getting a boost to their after-tax earnings from the GOP’s so-called “big beautiful bill,” which, among other things, made it easier to write off investments upfront and therefore reduce their tax liability, Zandi said.
Going forward
Experts said there will be an economic hit from the Iran war, though.
“Despite the recent news of a temporary ceasefire, some damage is already done, and the downside risks remain elevated,” Pierre-Olivier Gourinchas, director of research at the International Monetary Fund, wrote Tuesday.
A protracted conflict risks deep and global economic pain, he wrote.
Even if the conflict is short-lived — as the broad market expects — stocks are unlikely to march much higher until it’s clear the U.S. is on the other side of the war and its economic fallout, Zandi said.
If investors are incorrect, and President Trump doesn’t back down or quickly extricate the U.S. from the war, the stock market may see a “full-blown correction” or worse, Zandi said. A stock market correction is a decline of at least 10% from recent highs.
“Everyone thinks they know what the script is,” Zandi said. “Now they just need to follow the script. If they don’t, the market will have some real problems.”
The uncertainty provides yet another example of why the average investor with a long time horizon should stick to their investment plan and ignore the noise, experts said.
“Trying to time the market is very difficult if not impossible for the average investor,” Seydl said. “It’s better to take a long-term perspective and ride out bouts of volatility.”
What that means for consumer loans
Checks and Balance newsletter: Of God and MAGA
Why software stocks, 2026’s market dogs, have joined the rally
Armanino adds Strategic Accounting Outsourced Solutions
New 2023 K-1 instructions stir the CAMT pot for partnerships and corporations
