Recently, luxury businesses were optimistic about a booming economy and expected an era of deregulation, lower taxes, and a thriving stock market. They envisioned wealthy customers indulging in extravagant ball gowns and luxury watches. However, with the Trump administration imposing 20 percent tariffs on products from the European Union, these businesses now face a different reality. The tariffs may result in fewer luxurious items, higher prices, and uncertainty surrounding products labeled “Made in Italy,” “Made in France,” and “Made in Switzerland” for American consumers. The U.S. market, which accounted for 24 percent of the global luxury spend last year, is now uncertain. Euan Rellie, co-founder of investment bank BDA, stated that luxury is in a tight spot due to the sudden shift in the Trump administration’s stance. Besides, the industry was already grappling with challenges such as a slowdown in luxury sales in China, a recession in Germany, and an aging population in Japan. Despite the uncertainty, luxury brands have remained tight-lipped about how tariffs might affect their businesses and pricing. Analysts predict that prices will rise if tariffs remain in place, but luxury brands may absorb the costs or pressure their suppliers to reduce theirs. The increasing tariffs will also affect American companies and consumers, as the market for upscale apparel and leather goods may not prompt brands to establish factories in the United States. Certain luxury consumers may become more cautious in their spending as they face shrinking stock portfolios and recession fears. Tariff-related costs will add to the existing price hikes, potentially exacerbating the negative perception of luxury brands. However, even in a downturn, there may be winners like sellers of vintage designer goods.

Source: https://www.nytimes.com/2025/04/09/style/tariffs-eu-luxury-fashion.html