On “Liberation Day” President Donald Trump (in photo) announced new tariffs for all imported goods. Split between April 5 and April 9, Mr. Trump has put duties ranging between 20% (on the EU) to 10% on the UK, going from 31% on Switzerland to 34% on China will come into effect. And the fashion industry trembles: made in Italy, European luxury, and even (and especially) U.S. retailers. Because, according to JPMorgan, Trump’s cherished duties are “taxing Americans to the tune of 660 billion a year”, and will lead to rising inflation and recession for the world economy.
Italian accessories
The States are important for Italian leather product. “In 2024, exports to the United States from the footwear, leather goods, tannery and fur sectors reached a value of nearly 3 billion euros”, explains Giovanna Ceolini, president of Confindustria Accessori Moda. “Although the value is down 3.5% compared to 2023, it continues to reflect the solidity of our exports and the high appreciation for the quality of Made in Italy. For this very reason, Confindustria Accessori Moda is concerned: “The introduction of the new duties will further undermine these results. The increase in costs for American consumers could”, Ceolini continues, “drastically reduce demand, with negative consequences for our companies and jobs. We renew our call for Italy and Europe to unite to oppose this decision and protect the interests of our companies“.
The luxury unknown
Of course, consider City’s Thomas Chauvet’s note: luxury brands are notoriously strong in pricing power and, therefore, it’s to be expected that they will react by adjusting price lists for the States. But certainly the trade war will have an impact on their business and stock performance. City measures it with their exposure to the U.S. market (as a percentage of total sales). The impact may be minor for brands such as Moncler (13%), Prada (16%), Hermes (17%) and Burberry (19%). Higher for Brunello Cucinelli (34%), Ferragamo (31%), Kering (24%) and LVMH (25%). And this is despite the fact that the partnership headed by the Arnault family is the one that has invested the most in manufacturing in the United States. According to a note by analyst Piral Dadhania (RBC Capital Markets), BoF writes, LVMH produces 50% of the goods it sells here in the country.
Fashion trembles
No doubt, luxury is strong in terms of ability to dictate prices. But in the States more than 98% of clothing and about 99% of footwear sold annually are imported. How are U.S. retailers responding? They have a much bleaker outlook. According to BoF, some brands (such as Walmart) have asked suppliers to lower their price lists so they can absorb the levy: but suppliers, already operating on low margins, are not so keen. “We are deeply disappointed with the administration’s decision”, reads the United States Fashion Industry Association memo. “This action will particularly affect American fashion brands and retailers. For Matt Priest (FDRA, the footwear industry’s umbrella organization) the trade war for American families is “catastrophic“.
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