High-end fashion brands face a £75bn hurdle due to Trump's tariffs
Luxury Giants Suffer £75 Billion Loss Due to Trump's Tariff Announcements
Luxury goods giants, including LVMH, Hermès, Estée Lauder, and Italian fashion group Prada, have experienced a significant financial setback following Donald Trump's tariff announcements. According to recent reports, these companies have collectively lost nearly £75 billion in value due to a sharp downturn in consumer spending in major markets like China and the United States, combined with increased uncertainty from the trade war.
The tariffs have had a direct financial impact on these companies because many luxury products, such as Swiss-made watches, face steep duties—for example, a 39% tariff on Swiss watches—which significantly raises retail prices for American consumers. This price increase has dampened demand for high-end timepieces from brands like LVMH-owned TAG Heuer and others.
Specific impacts on companies like LVMH, Hermès, and Estée Lauder include a cumulative loss in market value of about £73.87 billion for ten major luxury brands, reduced sales from two key consumer bases, Chinese and American customers, due to tariff-induced price hikes and economic caution amid trade tensions. To mitigate the tariff effects, these companies are exploring customs strategies such as the US "First Sale" rule, which allows tariffs to be calculated on lower values to reduce cost impacts, but this involves complex compliance risks.
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Investors seeking to capitalise on various markets can utilise services provided by companies such as Hargreaves Lansdown, InvestEngine, Trading 212, AJ Bell, and Interactive investor. However, the uncertainties amid a trade war have only exacerbated hesitancy to spend, with analysts such as Susannah Streeter at Hargreaves Lansdown stating that 15% duties on EU exports will still be painful.
One of the hardest-hit companies is Italian fashion group Prada, modelled by Emma Watson, which has lost more than a quarter of its value. LVMH shares have sunk 17 percent, while Hermès and Estée Lauder have also seen significant declines in their share prices.
[1] The Telegraph, "Luxury brands hit by £75bn slump in value as Trump's tariffs bite," 15th August 2019. [2] Financial Times, "Luxury firms seek ways to navigate US tariffs," 16th August 2019.
- The collective losses experienced by luxury brands like LVMH, Hermès, and Estée Lauder, as a result of Trump's tariff announcements, indicate a need for investors to be cautious in the personal-finance and business sectors.
- As luxury companies like Prada, LVMH, and Hermès grapple with the financial impact of tariffs, investors look to services such as Hargreaves Lansdown, InvestEngine, Trading 212, AJ Bell, and Interactive investor for strategic investment opportunities in the midst of business uncertainties.
