Fortnum & Mason has reported a significant impact on its luxury tea exports to the United States, following recent changes in American trade policy under President Donald Trump. The London-based retailer, known for its high-end food and drink products, has seen prices rise and customer demand fall due to new tariffs and the removal of key import exemptions.
Tom Athron, chief executive of Fortnum & Mason, said that stricter country of origin rules and the end of the “de minimis” exemption for parcels valued under $800 (£587) had created considerable challenges for the business. The exemption previously allowed many of the company’s deliveries to US customers to avoid import duties.
Speaking to the Financial Times, Athron explained that the US authorities had redefined the rules for determining the origin of blended tea. “The American authorities have told us, this is the tea industry in its entirety, that if you’ve got tea from China and India in your tea, then its country of origin [is] China or India, and therefore those enormous tariffs apply,” he said.
The change has coincided with a broader escalation in trade tensions. Last month, the US administration imposed a 50% tariff on imports from India, citing the country’s continued purchase of Russian oil. Earlier in the year, tariffs on Chinese goods were raised to as high as 145%, before being reduced to 30% in May to facilitate negotiations between the two countries. Talks between the US and China were held in Madrid this week in an effort to reach a resolution.
As a result of these developments, Fortnum & Mason has been forced to increase delivery charges for its US customers. A 250g canister of loose leaf Royal Blend tea, which retails at $27.85, now incurs delivery fees starting at $25.41 due to the added taxes and duties. The retailer, which holds two royal warrants and has operated for over three centuries, was previously able to ship most of its products to the US without incurring tariffs.
US customs officials now assess whether a product has undergone “substantive transformation” to determine its country of origin. This process, Athron noted, is often unclear and difficult for retailers to navigate. The removal of the de minimis exemption has also led to increased caution among American consumers, particularly those purchasing gifts.
“A lot of our things are sent as gifts,” Athron said. “If you’re living in New York and I’m sending a present to you, I want to be sure that you’re not going to be landed with a $200 bill on receipt of your parcel. It’s all in hand, logistically we’re immaculate, it just means prices will go up for US consumers.”
Fortnum & Mason’s overseas sales, which include its renowned hampers and other luxury goods, totalled £12.5 million in the year to July 2024. This figure represents approximately 5.5% of the company’s overall revenue. The United States remains a key market for the retailer, particularly among expatriates and international buyers.
In addition to the effects of US trade policy, Fortnum & Mason has also faced broader inflationary pressures. The price of a 250g canister of loose leaf Breakfast Blend tea in the UK has risen by nearly 40% over the past five years, reflecting increased costs across the supply chain.
The company continues to monitor developments in international trade and is working to mitigate the impact on its customers. However, Athron acknowledged that the current environment presents significant challenges for British exporters of luxury goods.
