Vanessa Friedman e Jacob Bernstein
A month ago, luxury companies were looking forward to a new era of deregulation, lower taxes and a stock market – dreaming of wealthy buyers squandering in opulent gala dresses and sophisticated watches. Instead, as the Trump administration imposes 20% tariffs on European Union products, brands prepare for a different reality.
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A reality that can mean a market with fewer padded chanel bags, more expensive Rolex and uncertainty about the prices associated with “Made in Italy,” “Made in France” and “Made in Switzerland” for US consumers. The same consumers who, last year, were responsible for 24% of total luxury global spending, $ 1.62 trillion, according to Bain & Co.
“The US should be the Savior of the luxury goods industry,” said Euan Rellie, co -founder of the BDA Investment Bank, who operates in the fashion industry. “Trump administration said overnight: ‘Let’s not collaborate.’ Luxury is in a very difficult situation. ”
The market has already lived challenges, impaired by the slowdown of luxury sales in China, a recession in Germany and an aged Japanese population. Now, with the huge US market facing uncertainties, no brand has been willing to discuss how tariffs could affect their business or the prices of their products.
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An LVMH spokesman, the world’s largest luxury group, with more than 75 brands, including Dior, Louis Vuiton and FindersHe refused to comment-even though he knew that the United States represented 25% of the group’s revenue in 2024, and Vuitton is the only European luxury brand to have factories in the United States.
President Donald Trump cut the tape at a Vuitton factory in Texas during his first term, and LVMH CEO Bernard Arnault participated in Trump’s recent possession with two of his children.
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A Burberry also refused to comment, as well as the Chanel. There were no comments from HermesKering (owner of Gucci, Balenciaga and Saint Laurentamong other brands) and Puig (Carolina Herrera, Rabanne E Dries van Noten). Coach e Tory Burch They also preferred to be silent.
Doug Hand, a fashion lawyer who works mainly with independent American brands who get their materials from abroad, described his clients as “Browing your nails and pulling your hair”. Andrew Rosen, an independent US investor and advisor like TWP, Veronica Beard e Alice & Oliviahe said, “I don’t even know what our merchandise will be cost next week.”
Many luxury brands have large profit margins and can absorb some of the costs, or press their suppliers to reduce theirs, but analysts predict prices to rise – if tariffs remain in force.
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“Most people in their right mind are thinking they should just wait,” said Luca Celca, a senior analyst who covers luxury in the Bernstein research company. “The volatility of US politics in the last two months has been wild. The president may change his mind or can make an agreement with the EU.”
Certainly, no one is planning to build high quality clothing factories and leather items in the United States, one of the declared goals of administration’s tariff policy. “In all the conversations I had with customers in the last five to ten days, no person was talking about building a factory in the US,” said William Susman, an executive director of the investment bank Cascadia Capital, who worked with Victoria Beckham e Tommy Hilfiger.
Questioned if I was considered such a movement, Brunello Cucinellithe founder of the brand that bears his name, said he had no such plans. “‘Made in Italy’ is at the heart of our identity,” he said. “Our company is Italian, and we will continue to headquarters in Italy.”
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In the 1950s and 1960s, about 98% of the clothing in the US cabinets were made in America. Today, the total is about 2%. It would take years to reconstruct a viable clothing industry, Denise N. Green, associate professor and director of the University of Cornell Fashion and Textile collection.
Even the companies that make clothes in the United States do so with Zippers and buttons from China, Wool and Leather of Italy and Cashmeres of Mongolia. This is why, according to Bernstein’s, if 20% tariffs on European Union goods and 31% of Switzerland goods are implemented, “Americans will pay much more.”
“It’s not a country tax – it’s an American business tax and US consumers”
Of course, if any consumer can absorb higher costs, it is the luxury consumer. Conventional wisdom states that even in a slowdown, The luxury is resilient; The rich, though less rich, are still comfortable enough to satisfy their tastes for expensive goods. In this sense, the prospects for luxury are better than those of mass brands they produce in Vietnam and Cambodia and have smaller profit margins while facing even higher rates.
However, not all luxury consumers are equal, financially speaking. Achim Berg, founder of Fashion Sights, a think tank of the luxury industry, said that about 70% of luxury buyers are “wealthy and aspirational customers”instead of the type that didn’t care if the price of a $ 750,000 Lamborghini increased at $ 100,000.
These customers, reached both by decreasing stock portfolios and fear of a recession, may choose not to make discretionary purchases such as diamond bags or bracelets. People buy indulgences when they feel confident and optimistic, and the overall environment now, Berg said, is of “insecurity.”
Costs related to rates are additionally to years of luxury price increases. The bags Chanelfor example, more than doubled in price between 2016 and 2023. And that could contribute to an already “negative perception” of luxury brands, said Claudia D’Arpizio, global chief of fashion and luxury of Bain & Co. “They were already when they needed to regain customer confidence, so this is not going in the right direction,” she said. “There is a negative general feeling in society against products that are only for super rich.”
Even in a slowdown, however, “there will be winners,” said John Demsey, former president of the Exeée Lauder executive group. Vintage designer goods sellers could benefit of all the agitation. “I will closely watch luxury bag sales at Christie’s and Sotheby’s,” said Susman. Jacek Kozubek, a Vintage Rolex dealer, said one of his biggest partners in Japan, where many of his best pieces come from, flew to the United States last week with more than 400 watches before expected rates. Kozubek bought 50 watches in the amount of $ 300,000.
LOLACA said it is possible that a parallel market It develops in the United States, very similar to the system in China, in which individuals buy luxury products abroad, introduce them clandestinely into the country and then resell them to make profit.
And there is a tendency that all luxury analysts assume that it will resurface: the “silent luxury”, the 2008 recession aesthetics, when consumers left stores with purchases in simple paper bags and visible logos fell into disuse. “Even people who can still pay can Feel ashamed of the luxury”Said D’Arpizio.” They may not want to show off, using something that is instantly recognizable. “
This article originally appeared in The New York Times.
