The United States Court of Appeals for the Federal Circuit has ruled that Ildico Inc.’s luxury watches will be classified under a higher tariff rate than the company had sought. This decision affects the import duties on ten models of Richard Mille wristwatches, which are made primarily of gold and feature synthetic sapphire crystal windows. The ruling is significant for businesses involved in importing luxury goods, as it clarifies how certain materials in products can impact tariff classifications.
The case, Ildico Inc. v. United States, was decided on July 30, 2026, and stems from a dispute over how the watches should be classified under the Harmonized Tariff Schedule of the United States (HTSUS). The classification affects the duties that Ildico must pay when importing these watches, which are known for their high price tags and luxury status.
Ildico Inc. is the exclusive importer and distributor of Richard Mille watches in the United States. The company challenged a decision made by the United States Court of International Trade, which had upheld a classification by U.S. Customs and Border Protection (Customs). Customs determined that the watches should be classified under HTSUS heading 9102, which carries higher duty rates, rather than heading 9101, which has lower rates.
The dispute arose after an audit by Customs in 2016 found that the watches had been improperly classified under heading 9101. Ildico argued that the watches should be classified as “wrist watches with case of precious metal” under heading 9101. The company contended that the watches’ cases, made mostly of gold, qualified for this classification. However, the presence of large synthetic sapphire crystal windows on the backs of the watches complicated the classification.
The Trade Court ruled that the crystal windows are not negligible and therefore the cases of the watches are not made “wholly of precious metal.” Ildico appealed this decision, leading to the current ruling by the Federal Circuit. The court’s decision focused on the definitions of the terms in the HTSUS and whether the crystal windows could be considered part of the watch cases.
The Federal Circuit affirmed the Trade Court’s ruling, agreeing that the crystal windows on the backs of the watches are indeed part of the watch cases. The court stated, “the synthetic sapphire crystal backs of the subject Richard Mille watches are part of the watch cases.” This determination was crucial because it meant that the watches could not be classified under heading 9101, as that heading specifies that the cases must be “wholly of precious metal.”
The judges of the Federal Circuit included Circuit Judges Taranto, Bryson, and Cunningham. They reviewed the Trade Court’s interpretation of the HTSUS and agreed with its conclusion that the presence of the crystal backs disqualified the watches from being classified under the lower duty rate heading.
The ruling has significant implications for Ildico and other businesses importing luxury watches and goods. It clarifies that the classification of goods under the HTSUS can be affected by the materials used in their construction, even if those materials are not the primary components. This ruling may set a precedent for how similar cases are handled in the future, potentially affecting the import duties for luxury goods across the board.
Going forward, Ildico will have to pay higher tariffs on the imported watches classified under heading 9102. This decision could impact the pricing strategies for luxury watches in the U.S. market, as higher import duties may lead to increased retail prices.
Ildico has not indicated whether it will seek to appeal the ruling further. There are no related cases pending at this time, but the implications of this decision could resonate throughout the luxury goods importation sector.