Luxury Brands Feel Tariff Pressure

European luxury groups are heading into the United States market with a new tariff bill just as that market had become one of their few reliable growth engines. (cnbc.com) The Trump administration announced broad new tariffs on April 2, 2025, including a 20% rate on most European Union goods due to start April 9. Trump then paused the higher rate for 90 days on April 9 and cut the European Union rate back to a 10% baseline, while separate 25% tariffs on steel, aluminum and automobiles stayed in place. (europarl.europa.eu) Luxury shares reacted quickly when the levies took effect. CNBC reported that LVMH, Richemont, Kering and Hermès all traded lower on April 9 as investors weighed both the direct import cost and the risk of weaker consumer confidence. (cnbc.com) The timing is awkward for the sector because China had already stopped doing the heavy lifting. Bernstein estimates cited by CNBC put the Americas at roughly 15% to 30% of sales for major European luxury groups, and analysts said the United States had become a key growth driver as China demand weakened. (cnbc.com) Company results show the same shift. LVMH said on January 27, 2026 that its United States business grew in 2025 on “solid local demand,” even as Europe declined in the second half and Asia only returned to growth later in the year. (lvmh.com) Richemont, the owner of Cartier and Van Cleef & Arpels, reported sales of 21.4 billion euros for the year ended March 31, 2025, up 4%, while warning that geopolitical and macroeconomic conditions remained uncertain. Kering, which owns Gucci, reported 2025 revenue of 14.7 billion euros, down 13%, and said North America was only broadly in line with third-quarter trends in the final quarter. (richemont.com) (kering.com) Luxury groups have fewer easy workarounds than carmakers or industrial companies because “made in France,” “made in Italy” and “made in Switzerland” are part of what they sell. CNBC reported that analysts expect many brands to try to pass tariff costs on through higher prices rather than move production to the United States. (cnbc.com) That strategy has limits if the tariff fight turns into a broader slowdown. JPMorgan raised the odds of a United States and global recession to 60% after Trump’s tariff announcement, CNBC reported, and Deutsche Bank said weaker stock markets and economic uncertainty could delay any recovery in luxury demand. (cnbc.com) Brussels initially held back from immediate escalation after Trump’s April pause. European Commission President Ursula von der Leyen said on April 10, 2025 that the European Union would suspend its own countermeasures for 90 days to give negotiations a chance, while keeping retaliation on the table if talks failed. (europarl.europa.eu) By early 2026, the sector was still leaning on American shoppers for stability while trying to protect margins with selective price increases and tighter costs. That leaves LVMH, Kering and Richemont exposed to the same question hanging over the tariff dispute: how much more the United States customer will absorb. (lvmh.com) (kering.com) (cnbc.com)