Image Credit: Milan, Italy – February 22, 2018: Fashionable girls wearing Fendi clothing posing after Fendi fashion show during Milan Fashion Week – street style concept.
By: agcreativelab | Adobe Stock
Luxury’s U.S. market just got more complicated. A new trade deal between President Donald Trump and European Commission President Ursula von der Leyen avoided a 30% tariff. Still, it imposed a 15% duty on EU goods — a hit that comes as global luxury sales are already in decline.
For years, top houses like Chanel, Louis Vuitton, and Dior fueled profit growth through aggressive price hikes — Chanel’s classic quilted flap bag has more than tripled in price since 2015. But analysts warn the industry’s ability to raise prices further is wearing thin. Between 2019 and 2023, half of the luxury industry’s sales growth came from higher price tags. Now, with the sector losing an estimated 50 million customers last year, the risk of alienating younger and occasional shoppers is real.
Some brands may offset tariffs with modest 2% price hikes in the U.S., but others have little room to maneuver. Hermes, which avoided significant increases during the post-pandemic boom, is outpacing rivals and is expected to post 10% sales growth this quarter. Meanwhile, LVMH’s latest results missed expectations, and Gucci, Moncler, and other labels continue to struggle.
The pressure is driving more shoppers to the resale market, where platforms like The RealReal and Fashionphile offer luxury staples at thousands less than retail. As Bain forecasts a 2–5% global sales decline this year — the steepest drop in 15 years outside of COVID — luxury’s challenge is twofold: justify prices with quality and creativity, and adapt quickly to shifting consumer expectations.
Read the full story for a deeper look at how tariffs may reshape high-end retail.
