Watching Brief for Bloodstock World as Trump Enforces Trade Tariffs

[Wandering Eyes]

It felt more doomsday than liberation day as the world – especially those people who do business with America – awaited President Trump's address from the White House on trade tariffs.

In the bloodstock sector, where horses are regularly traded between Europe and the United States, the one thing we can be certain of for now is that the issue will add some uncertainty to the market.

A first test of the degree to which it will affect the sales will come when the breeze-ups get underway later this month. The Arqana Breeze-up Sale at Deauville in May has routinely attracted not just many American-bred horses pinhooked in Kentucky the previous autumn but also plenty of American buyers.

Some of those regular transatlantic visitors recently told Sue Finley what it is they like about this two-year-old sale in particular, but that was before the introduction of a 20 per cent trade tariff on the European Union (EU) trading bloc for all imports to the USA. This could affect sales in France, Ireland, Germany and Italy, and, to a lesser extent, Britain, which left the EU in 2020 but had a 10 per cent tariff imposed by Trump on Wednesday. These will come into effect from April 9.

According to the Financial Times, EU leaders are now planning a four-week period of consultation and negotiation before deciding whether to issue retaliatory tariffs on American goods. Britain's prime minister Sir Keir Starmer is holding out for a trade deal that will reduce the 10 per cent rate but has not ruled out some degree of retaliation.

At Arqana, close attention will be paid to these crucial EU negotiations, according to CEO Freddy Powell, who adds, “And we have a very close alliance with the Irish agricultural industry.”

We're not only selling horses, it's the whole package, and often the American buyers are coming to find something they don't have at home – Freddy Powell

Fluctuations in currency strength routinely affect the ebb and flow of spending from different nations, and that will doubtless play a part this year too. In the immediate aftermath of Trump's announcement, the pound and the euro both rose against the dollar.

“The impact on the American buyer is still very difficult to calculate because obviously, through political and economical actions, there can be a lot of change between the euro, sterling and the dollar, so that 20 per cent could actually be far less in the end,” Powell says.

Furthermore, not all international purchasers at sales are exporting the horses they buy, with plenty of Americans counted among the overseas clients supporting stables and stud farms in France, Britain and Ireland.

“Half of the American purchases stay in France,” Powell says of the trade at Arqana. “Our American clients are not only attracted by the genetics of our horses and the know-how of our breeders and trainers, they also come to buy horses in France to enjoy the French racing, the atmosphere – the savoir vivre a la Francaise. We're not only selling horses, it's the whole package, and often the American buyers are coming to find something they don't have at home. So this demand is not going to stop from one day to another – 9 April is not going to be the day of the funeral of French racing for the Americans.”

It is a similar story at Tattersalls, particularly at the yearling sales. At last year's Book 1 of the October Yearling Sale, at least 43 yearlings were bought by American entities for almost 12 million gns, just less than 10 per cent of that elite sale's total turnover.

It is difficult to wholly assess the exodus of bloodstock from Europe to America but the Weatherbys Fact Book states that last year 117 British-bred horses were permanently exported to the US, and that number has been largely consistent over the last four years, with 442 having been exported during that time. The number is greater when it comes to Irish-breds, of which 304 were exported to America last year (1,187 in the last four years).

Alongside public auctions, there is strong trade in private purchases for horses who have shown decent form in maidens. Earlier this week, Brian Sheerin reported on the lucrative sale of Curragh maiden winner Dupont Law (Ire) (Le Havre {Ire}), who will be leaving Ciaran Murphy to race on in America.

A new wave of Middle Eastern buyers and an emerging force in Amo Racing, as well as the big-spending Yulong operation and typically strong demand from Japan and Australia, were all significant factors in healthy returns in last year's yearling, foal, horses-in-training and breeding stock markets in Europe. Indeed, it could be argued that if, say, Japan responds like-for-like to the imposed 24 per cent tariff, then perhaps buyers from that country will favour European sales over those in America, where they also make a significant impact.

Powell says, “We need to put things into perspective: the American market is very important for Arqana, it amounts to 10 per cent of our trade, but also we are very lucky to have a massive spectrum of international clients. As an example, in August 2024, we had 11 different buyers for the 11 top prices of the sale, and they were from nine different countries.”

With regard to the forthcoming breeze-up sales in particular, it is worth noting that horses bearing a USA suffix sold in Europe would not be subject to tariffs if returning to America for a racing career.

There is little doubt, however, that the market for two-year-olds over the next two months will have a knock-on effect for the yearling sales, which in turn affects the foal trade. A number of people from different roles canvassed for their opinions on this emerging situation said that they preferred not to be quoted but would be keeping a close eye on developments.

That old saying that a week is a long time in politics is perhaps particularly true of the volatility of the current era. The one thing that we have learned about the bloodstock business, particularly since the more troubling days of the Covid pandemic, is that its participants are resilient and adaptive. They may need to be once more as the true impact of the tariffs is assessed in the coming months.

 

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