Luxury alert: Pricey European brands could soon cost more
Gucci, Chanel, Cartier, Saint Laurent, some of the most coveted European luxury brands, could become even more expensive for shoppers because of new sweeping global tariffs announced by President Donald Trump on goods that are coming into the United States.
“With the Trump Administration’s announcement of 20%, 10% and 31% tariffs on imports from the EU, UK and Switzerland, respectively, we expect most luxury brands to pass that on to the end consumer through another round of high-single-digit percentage price increases in the US in the coming weeks,” Thomas Chauvet, luxury analyst with Citi Research, wrote in a note this week.
Chauvet said luxury brands will also try to “identify cost savings opportunities in their US and global operations to mitigate some of the tariffs impact.”
On Wednesday, President Trump announced “reciprocal tariffs” (taxes levied on imported good) on more than 180 countries and territories, which include a 10% baseline tariff across the board but with some countries paying much higher rates.
Looking at luxury products poised to take the biggest hit, Chauvet said the 31% tariff on Switzerland is particularly worrisome for one specific category — watches.
The tariff, he wrote is “probably higher than what was originally expected, which would mostly impact Swiss watchmakers and some jewelry makers.”
The US represented the Swiss watch industry’s largest export market in 2024, accounting for 17% of its global exports.
Elsewhere, he said the 10% tariff on the UK is problematic for high-end label Burberry’s products sold in the US.
According to Chauvet, international retail brands (luxury and high-end) with the highest revenue exposure to the US include Birkenstock (47% of sales are generated in the US), Brunello Cucinelli (34%), jewelry brand Pandora (31%), Ferragamo (31%), LVMH Moët Hennessy Louis Vuitton (25%), Kering (24%, owner of Yves Saint Laurent, Gucci and Balenciaga) and Richemont (20%, owns Cartier and Van Cleef & Arpels).
Aspirational buying at risk
Retail industry analyst and consultant Jean-Marc François told Bagable.com that he expects prices could increase as soon as next week on imported luxury fashion, such as clothing and handbags.
“Some companies will hold off until the next import cycle of their products coming into the US while many will do it immediately,” he said.
The consumers who will feel the pinch of higher price tags on luxury merchandise won’t be the wealthy clientele. “Usually it is the aspirational buyers of luxury brands who wait for a special occasion, such as a 10-year anniversary to buy a spouse a Louis Vuitton handbag, who will move away and seek affordable alternatives.”
“The risk here is that aspirational shoppers are truly the bulk of the shoppers of luxury brands and they will be the ones who are hit the hardest,” François said.
Imported luxury cosmetics and skincare could also see short-term increases in prices, Philippe Tellier, beauty industry expert, told Bagable.com.
“However, since luxury cosmetics and skincare are high value categories with low cost of goods, the drivers of any price increases in these categories will not be tariffs, per se, but inflation and exchange rate volatility,” Tellier said.