Donald Trump’s trade war has destroyed expectations for a recovery led by the US market this year, as tariffs threaten to last a decline in hand bags and high -level hours.
HBA and China, twin engines that strengthen the global demand for luxury goods, have continued to capture import tasks with titles in each other’s products in a febrile commercial dispute that risks severely damaging consumer trust in the two largest economies in the world.
Analysts have responded by reducing growth predictions throughout the industry. Bernstein this week predicted that the luxury sector would fall a 2 percent decline in 2025 revenue, changing its previous prediction by 5 percent of growth due to increased economic uncertainty and increased global recession.
“Our basic case is now any luxury taking has been postponed in 2026,” said one industry banker.
The apparent giving this weekend of a return to technology groups from US raised tariffs in China, only for the administration to signal on Sunday that consumer electronics will fall under a special task regime, instead underlines the difficulties that anticipate the hit for each sector.
But while Trump can still change the course in his tariff plans, the banker said, “Much of the damage has already been done.”
LVMH, whose boss of billionaire Bernard Arnault flew to Washington in late March to discuss potential tariffs with Trump, a long acquaintance, begins the season of luxury profits on Monday.
Arnault in January followed Trump’s inauguration and then greeted “a smell of optimism” including in the Luxury Magno Said at the time he was thinking of increasing the production of LVMH in the US.
Barclays expects organic sales in the essential sharing of fashion and LVMH skin – a bell for the industry – fall by 1 percent in the first trimester. Group sales are expected to be flat against the same period last year.
Bernstein analyst Luca Solca stuck from his reduced estimates for the sector as a whole in 2025, even after Trump on Wednesday announced a 90-day pause on his “reciprocal tariffs” for countries that showed a willingness to renegotiate trade agreements with SH.BA
“Returning to previous numbers, as if what happened was just a bad dream, is out of question. We have material damage to financial markets and the economy as a result of messy policy announcements,” Solca said.
“Uncertainty reigns supreme, which is normally a great backdrop for a recession,” he added.
After a historical boom during the pandemic, when consumers spread in high bags and alcohol, luxury has stalled while middle -class buyers return to China’s expenses and the economy is forgiven. This is now being erased by Trump’s trading war.
Trump has singled out China, a major market for the luxury sector, for punishment. US tariffs on Chinese goods are now staying at 145 percent. China, in response, has raised US imports to 125 percent.
Most luxury goods are made in France and Italy, while high -level hours take place in Switzerland. The US is undergoing all three countries at a 10 percent fee after returning the highest rates it initially imposed.
Trump’s tinkering has created chaos on the ground. One executive said his company had been forced to change task rates in US -led remittances three times in less than a week.
“Loss of confidence is long -term … and uncertainty is an absolute poison for the consumer’s feeling,” he added.
The tariffs themselves, as they stand today, are still more manageable for luxury companies than many others, and stronger brands have more ways to mitigate impact through price increases. But in an industry that depends on the consumer’s trust, the deepest damage is psychological.
Brutal sale in global stock markets this year will leave many luxury buyers who feed their wounds. “If you look what happens to the stock market, you can predict (essentially) the business level in our boutiques,” Bruno Pavlovsky, Chanel fashion president, told the Financial Times last month.
Erwan Rambourg, managing director at HSBC, wrote that the risks to luxury lie in a combination of wealth destruction, limited the power of consumer spending at the US and widespread deterioration in consumer feeling.
“We’re waiting, quite literally, fewer bottle bottles appear this year,” he wrote.
HSBC now expects organic sales to fall 5 percent this year, compared to its previous reception for sales to remain flat compared to 2024.
Bank analysts had improved most of the luxury actions at the end of last year with the confidence that they would benefit from a luxury cost -led. “This will no longer be in our view,” they writes.
Expectations for “little growth” in continental China, after a painful 2024, are looking increasingly impossible.
However, Hermès, the group behind the highly sought after Birkin bags, is expected to continue. Analysts at Barclays estimate that its sales will increase by 8 percent in the first quarter.
But the problems in Gucci, the largest brand of Kering, have left the group highly exposed to any decline. Barclays expects Gucci’s sales to decrease 25 percent in the first quarter while Bernstein warns that Kering is now “very impossible” to meet his instructions for flat income and operational profit in 2025.
Additional reporting by Lauren Indvik in London and Alex Rogers in Washington
