What will be the impact of duties on luxury brands? Flavio Cereda, Investment Manager explains it Luxury Brands of Gam Explaining that the US consumer is the second largest luxury buyer globally after the Chinese, covering about 23-24% of the market globally. In January we had estimated that this group would mark a growth of 6-8% this year, By bringing global expenditure for luxury to +4% (remember that the long -term average is 6%), after 0% last year. These numbers are clearly too high and we have already revised them at 4-6% and +3% respectively. By the summer there should be greater clarity. The US consumer acquires at home on average 2/3 of the luxury expenditure and when he travels 1/3, which can climb if the dollar is strong.
What do we think now?
It must be said that 20% (or 31% for Swiss watches) do not apply on the final price but but on the transfer or import price; Therefore, usually well below half of the impact on the retail price, the prices in the United States will clearly increase, explains the expert by stressing that “this will vary according to the brand (influence, desability, customer profile), but surely there will be an impact on the margin at the local level”.
The dollar has returned to pre-elections levels, so there is a lower incentive to travel, but what worries me is also the increase in anti-ageism. It is too early to say it, but this could be a problem in Europe, for example. It is clear that inflation will increase in the United States and, assuming that the cuts of the rates are delayed, there are real question marks on the resilience of US consumers.
However, although credit cards indicate a weaker expenditure since mid -February, these data are often misleading for the luxury sector, where the consumer is more resilient. All the managers with whom dialogue confirm that they have not yet seen any reversal worthy of note. Having said that, we are now more cautious.
We consider that:
THEleather goods it touched the bottom at the top of the pyramid, and then grow as the pyramid descends
Clothing, as above
Saran watchesor hard affectedbut not the luxury brands, which unfortunately are not listed; So Rolex, Audemars, Patek, A thousand etc. They will be fine … Omega etc. Instead no.
THE jewels They will be affected above all in the lowest range and the US production is limited (Tiffany is in a better position).
Sneakers and sporting goods will all be affected hard (but who does not produce in Asia?).
Much is already implemented in prices, so it is hoped that soon we will have greater clarity and less volatility, but clearly a certain degree of derating is destined to last. Unless brands have already have production plants in the United States, it is very unlikely that they transfer production to you.
Analysis of possible impacts for a selection of companies
Hermes –At the top of the pyramid, then the sector will overflow in the United States. With 19% of sales in the United States, prices will probably increase in this market. Limited impact
Ferrari – Much on top of the pyramid, then it will overflow. 25% of sales in the United States. It has already indicated an increase in prices of 10% starting from April 2 in the United States and a drop in the margin of 50 basis points. Very limited impact despite the announcement of a 25%duty.
Richemont – The watches will be affected. The jewels (3/4 of the Richemont business) much less by virtue of the high profile of the brand and the faithful basis of customer. Prices in the United States will inevitably increase. Moderate impact
LVMH – A mix: the United States are their largest market, but Tiffany and Louis Vuitton can increase local production to mitigate the impact (but probably only in 2026). Moderate impact with some probable price increases.
Essilor Luxottica – Almost 50% exposure to the United States, but huge market share and most glasses are produced outside the United States (also applies to all competitors). In addition, most of the products are not high -end. The expansion in the medtech sector is helping. Moderate impact.
Ralph Lauren – Almost 50% of exposure in the United States and risk of anti-US brains abroad. The brand’s momentum is still strong. Prices will increase, but not in the high end of the pyramid. Significant impact.
Viking Holdings – 80% of customers are US, but 90% of the capacity for 2025 has already been sold and the returns are upwards. There are no cancellations and sales for 2026 are in line with expectations. Limited impact.
Amer Sports – The supply in Asia (Vietnam, China) will be penalizing, but the brand has a strong momentum globally. Exposure to the United States is 26%, lower than average. Moderate impact.
Brunello Cucinelli – Exposure to the United States, equal to 37%, but it is the highest range of the pyramid; So the prices in the United States will increase with limited repercussions by the most wealthy local consumers band. Limited impact.
Tapestry – Exposure to the United States greater than 60% and not in the highest band of the pyramid, although coach is growing rapidly. Limited possibility of increasing prices to compensate for Asian duties. Significant impact.
