Already faced with “front winds”, luxury now faces American customs duties

Bad pass for luxury: already faced with a drop in the consumption of chic hands, perfumes and outfits of major brands, the sector must now face customs duties on its exports to the United States, one of its main markets.

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“We face front winds. For example, with the economic difficulties of the world economy,” said Bernard Arnault, CEO of the world number one LVMH. Meanwhile, “Added geopolitical difficulties and the decrease already faced “front winds”, luxury in tourist trips to Europe and the United States,” he said.

The net profit of LVMH (Louis Vuitton, Dior, Celine …) dropped in the first half of 22% to 5.7 billion euros and sales fell 4% to 39.8 billion.

Now is also responsible for the issue of customs duties of 15% on exports to the United States. For example, according to an agreement on Sunday between US President Donald Trump and the president of the European Commission Ursula von der Leyen.

An agreement not “perfect” but “necessary” in the “current context”, defended Bernard Arnault on Tuesday. Therefore, Donald Trump had threatened the EU with customs duties by 30%.

The American market represents 25% of LVMH sales. Consequently, which will open in the United States a new Louis Vuitton workshop, its flagship brand, in Dallas at the end of 2026 or in early 2027. Furthermore, The group already has three Louis Vuitton already faced “front winds”, luxury workshops in the United States.

Many luxury groups consider that customs duties of 15% remain acceptable. It is “manageable”. according to Kering’s word, which despite its difficulties in rectifying its flagship brand Gucci believes that it can increase prices on “certain brands” to compensate, according to its financial director Armelle Poulou.

Drop in dollar

Unlike LVMH. the group of François-Henri Pinault, owner of Gucci, Yves Saint Laurent, Balenciaga and Bottega Veneta, does not have a workshop in North America, where it makes 24% of its sales.

“We sell French culture, we sell Italian culture. It would not make sense for me to have Italian Gucci bags made in Texas,” said François-Henri Pinault recently.

Prudent, the manager of Hermès Axel Dumas prefers “to wait for the rules of the precise game”. “The latest announcements need to be refined,” he said, stressing that customs duties were 4.7% at the start of the year, to already faced “front winds”, luxury which in April added new “approach costs” as Hermès calls 10% surcharge.

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“If the 15% is the 10% plus the 5% that existed. there is no reason to increase prices,” said Axel Dumas. Following customs duties of 10% imposed in April. the group raised its grid in the United States by 5% which did not slow down its sales in the “Americas” area, up 6.3% in the second quarter.

Hermès, who seems to him not to meet “front winds”, announced sales on Wednesday 7.1% in the first half.

The British Burberry is not worried either. In the first quarter of his offbeat exercise, he saw his sales in the “Americas” region increased by already faced “front winds”, luxury 4%. Great Britain has negotiated customs duties of 10% for products exported to the United States.

“Obviously, 19% of our turnover comes from the United States. Admittedly. this still represents an obstacle, but 81% of our activity is not affected,” the financial director Kate Ferry said during an exchange with analysts.

Beyond the accounting impact. customs duties could also affect “the confidence of consumers (luxury) on a global scale, in particular in the important Chinese (around one third of sales) and American (about 25% of sales) markets,” said UBS bank in a note.

They should also push American luxury amateurs to buy abroad due to price differences depending on the country. which can be “in the order of 10%, in addition to the reimbursement of VAT in Europe”, according to UBS.

The exchange question is major. underlined Axel Dumas: “We have a dollar that has dropped a lot, that has as much impact, if already faced “front winds”, luxury not more, as customs duties.”

By Katell Prigent
Paris, July 30, 2025 (AFP)