Even more headwind for the luxury industry: US tariffs tighten the location

Difficult times for the luxury industry: In addition to the decline in consumer expenses for high -quality handbags, perfumes and designer clothing, the industry must now also deal with tariffs to its exports to the United States, one of its most important markets.

“We face major challenges due to the difficult global economic situation,” said LVMH CEO Bernard Arnault. There would also be geopolitical difficulties and the decline in tourism in Europe and the USA. LVMH’s net profit dropped by twenty -two percent to 5.7 billion euros in the first half of the year. Sales decreased by four percent to 39.8 billion euros.

Now the question of fifteen percent tariffs is added to exports to the USA. These were agreed on Sunday between US President Donald Trump and the President of the European Commission, Ursula von der Leyen. Arnault defended an agreement that is not “perfect” but in the “current context” “necessary” on Tuesday. Trump had threatened the EU with tariffs of thirty percent.

The US market is twenty-five percent of LVMH’s sales. The group will open a new Louis Vuitton Manufaktur in Dallas at the end of 2026 or early 2027. LVMH already has three Louis Vuitton workshops in the USA.

Many luxury groups consider fifteen percent tariffs to be acceptable. They are “manageable,” said Kering. Despite the difficulties of getting his flagship brand Gucci on course, the group assumes that it can increase the prices for “certain brands” in order to compensate for the tariffs, says Finance chief Armelle Poulou.

Decline in the US dollar

In contrast to LVMH, Kering boss François-Henri Pinault, owner of Gucci, Yves Saint Laurent, Balenciaga and Bottega Veneta, does not have a production facility in North America, where he achieves twenty percent of his sales.

“We sell French culture, we sell Italian culture. It would make no sense for me to have Italian Gucci bags made in Texas,” said Pinault recently.

Hermès Managing Director Axel Dumas is careful and wants to “wait for the exact rules of the game”. “The recent announcements still have to be specified,” he said. He emphasized that the tariffs were 4.7 percent at the beginning of the year, which in April were added to new “flow costs”, as Hermès calls the ten percent surcharge.

“If the fifteen percent are the ten percent plus the five percent that existed, there is no reason to increase prices,” said Dumas. After the ten percent tariffs imposed in April in April, the group increased its prizes in the United States by five percent. This did not slow down sales in the “America” region, which rose by 6.3 percent in the second quarter.

Hermès, which apparently does not feel a headwind, reported an increase in sales of 7.1 percent in the first half of the year on Wednesday. The British fashion group Burberry is also unscathed. In the first quarter of his financial year, he recorded an increase in sales in the “America” region by four percent. Great Britain has negotiated tariffs of ten percent for the products exported to the USA.

“Nine percent of our sales come from the USA. This is still an obstacle, but one -time percent of our business is not affected,” said CFO Kate Ferry in a conversation with analysts.

In addition to the accounting effects, the tariffs could also “affect the trust of the (luxury) consumers worldwide, especially in the important markets of China (about a third of the sales) and the USA (about a quarter of sales),” said Bank UBS in a message. They are also likely to be American luxury lovers: inside to buy abroad because the price differences between the countries can “be in the order of ten percent, in addition to the VAT reimbursement in Europe,” said UBS.

The exchange rate question is of great importance, emphasized Dumas: “The dollar has fallen very much, that has just as much, if no longer, effects like the tariffs.”