A great personality, Mr. Arnault," Donald Trump once proclaimed in the lobby of Trump Tower in Manhattan.
The threat? Tariffs of up to 20 percent on European imports.
A Market with Golden Potential
The USA is the largest single market for luxury goods worldwide. According to Bain and Altagamma, American buyers generated approximately 86 billion euros in revenue in 2023 and 2024 combined. For industry giants like LVMH (Louis Vuitton, Moët Hennessy), the market accounts for almost a quarter of their global revenue. Kering (Gucci, Saint Laurent) and Hermès also greatly benefit from the purchasing enthusiasm of US Americans. But while Europe produces, America buys – and tariffs could threaten this balance.
Trump and the Power of Relationships
Arnault's close ties to Trump could prove useful again.
LVMH also invests heavily in lobbying: Since 2018, nearly two million dollars have flowed to the Washington-based S-3 Group, whose strategist Martin Delgado is closely connected with Republican circles. But other luxury giants are also digging deep into their pockets. Chanel, for example, has spent over 240,000 dollars on lobbying since 2019.
Luxury and Tariffs: Who Pays the Price?
If tariffs come, it will show whether the industry can pass the costs on to its wealthy clientele.
However, rising prices are not a new challenge: Between 2020 and 2023, the prices for Chanel and Dior bags increased by over 50 percent. But the breaking point seems to have been reached. Claudia D’Arpizio of Bain warns: "Annual price increases of 20 percent are impossible.
Relocation of Production?
A radical move would be relocating production facilities to the USA. However, this idea is not only impractical but could also undermine brand authenticity. "The craftsmanship found in Italy and France does not exist outside of Europe," D'Arpizio emphasizes.
An attempt to bottle Hennessy Cognac in China recently failed due to worker strikes. And smaller brands may also be forced to tap into markets outside the USA in the face of rising costs.
Hope in a Strong Currency
A glimmer of hope remains in shopping tourism: Americans traveling to Europe could continue to shop vigorously given a strong dollar.