Only month ago, luxury companies looked forward to a new era era, lower loads and a thriving stock market and dreamed of well-to-do buyers who splashed ball dresses and statement watches.
Instead, since the Trump government imposes 20 percent rates for products from the European Union, they are braced for another reality. One that an American market can mean with less quilted Chanel bags, more expensive Rolexes and uncertainty about the price tags associated with “Made in Italy”, “Made in France” and “Made in Switzerland” for American consumers. The same consumers who were responsible last year for 24 percent of the total $ 1.62 trillion worldwide luxury editions, according to Bain & Company.
“The US would be the Savior of the luxury goods industry,” said Euan Rellie, co-founder of the Investment Bank BDA, who works in the fashion industry. “The Trump government said at night:” We’re not going to play a ball. “Luxury is in a very difficult place.”
It was already challenged, hurt by the delay of luxury sale in China, a recession in Germany and a aging Japanese population. Now, with the enormous American market with uncertainty, there were no brands in the mood to discuss how rates can influence their companies or the prices of their products.
A spokesperson for LVMH, the largest luxury group in the world, with more than 75 brands, including Dior, Louis Vuitton and Fendi, refused to comment – although the United States were responsible 25 percent Of the turnover of the group in 2024, and Vuitton is the only European luxury brand that factories has in the United States. (President Trump cut the ribbon in a Vuitton factory in Texas during his first term, and the LVMH Chief Executive, Bernard Arnault, attended the recent Trump inaugural with two of his children.)
Burberry refused to comment, just like Chanel. There were no comments from Hermès, Kering (owner of Gucci, Balenciaga and Saint Laurent, including brands) and Puig (Carolina Herrera, Rabanne and Dries van Noten). Coach and Tory Burch also preferred to stay mommy.
Doug Hand, a fashion lawyer who mainly works with independent American brands that involve their material from abroad, described his customers as “biting their nails and pulling out their hair.”
Andrew Rosen, an investor and consultant from independent American brands such as TWP, Veronica Beard and Alice & Olivia, said: “I don’t even know what the costs of our merchandise will be next week.”
Many luxury brands have large profit margins and can absorb some of the costs, or reduce their suppliers to lower theirs, but analysts predicted that prices would rise – if the rates would remain in place.
“Most people with a good sense think they just have to wait,” said Luca Solca, a senior analyst who covers luxury at the research agency Bernstein. “The volatility of American policy in the past two months has been wild. The president can change his mind, or he could conclude a deal with the EU”
Certainly, no one is planning to build luxury clothing and leather-good factories in the United States, one of the indicated goals of the administration rate policy.
“In every conversation I had with customers for the past five to 10 days, no person talked about building a factory in the US,” said William Susman, a director of the Investment Bank Cascadia Capital, who worked with Victoria Beckham and Tommy Hilfiger.
Asked if he is considering such a movement, said Brunello Cucinelli, the founder of his name that he did not have such plans. “Made in Italy is the core of our identity,” he said. “Our company is Italian and we will remain in Italy.”
In the 1950s and 60s, around 98 percent of clothing in cupboards in the United States was made in America. Nowadays the total is around 2 percent. It would take years to rebuild a viable clothing industry, said Denise N. Green, assistant professor and the director of the Cornell University Fashion and Textile Collection. Even companies that make clothing in the United States do this with zippers and buttons from China, wool and leather from Italy and cashmeres from Mongolia.
That is why, Mr. Solca of Bernstein said, as the rates of 20 percent on goods from the European Union and 31 percent of the goods from Switzerland continue, “Americans will pay much more.”
And that is why Mr. Rosen said: “This is not a tax on countries – it is a tax on American companies and American consumers.”
Of course, if a consumer can absorb higher costs, this is the luxury consumer. Conventional wisdom is that even in a recession luxury is resilient; The rich, although less rich, are still comfortable enough to pamper their taste to expensive goods. In that sense, the prospects for luxury are better than that of mass market brands that produce in Vietnam and Cambodia and have smaller profit margins while confronted with even higher rates.
Yet not all luxury consumers are the same, financially. Achim Berg, the founder of Fashion Sights, a think tank of the luxury industry, said that about 70 percent of the luxury buyers were ‘prosperous and ambitious customers’, instead of the kind that did not mind or the price of a $ 750,000 Lamborghini was $ 100,000. Those customers, affected by both shrinking stock portfolios and the fear of a recession, can opt for discretionary purchases such as handbags or diamond tennis images.
People buy indulgences when they feel self -confident and optimistic, and the general environment now, Mr Berg said, is one of ‘uncertainty’.
Rate -related costs would be added to the years of luxury price increases. Chanel bags, for example, more than doubled in the price between 2016 and 2023. And that could contribute to an already “negative perception” of luxury brands, said Claudia d’Arpizio, the global head of fashion and luxury practice at Bain & Company.
“They were already at a time when they had to recover, so this is not going in the right direction,” she said. “There is a general negative feeling in society against products that are only for superwealthy.”
Even in a recession there will be “there are winners,” said John Demsey, the former director of the Executive Group of Estée Lauder.
Sellers of vintage designer energy can benefit from all the unrest. “I will keep a close eye on the luxury handbag sales of Christie and Sotheby,” said Mr. Susman.
Jacek Kozubek, a vintage Rolex dealer, said that one of his largest partners in Japan, where many of his best pieces came from, flew to the United States last week with more than 400 watches prior to the expected rates. Mr Kozubek bought 50 watches for an amount of $ 300,000.
Mr. Solca said it was possible that a gray market could develop in the United States, just like the Daigou system in China, in which individuals buy luxury goods abroad, sneak them into the country and then resell profit.
And there is one trend that all luxury analysts assume that it will appear again: “Silent Luxury”, the aesthetics of the recession of 2008, when consumers left stores with purchases in ordinary paper bags and visible logos from the grace.
“Even people who can still afford it can have luxurious shame,” said Mrs. D’Arpizio. “They may not want to be that show-off, wearing something that is immediately recognizable.”
