Special Report: Losses in the Luxury Sector on the Stock Market Following Trump’s Tariff Announcement

Last update: April 6, 2025

1. General Context: A Trade War Declaration for the 21st Century

On April 3, 2025, U.S. President Donald Trump once again disrupted global trade by announcing a sweeping set of new tariffs, including a 20% levy on products from the European Union and up to 54% on goods from China. Dubbed “America First 2.0”, this move has been described by analysts as the most aggressive protectionist measure in over a century.

Justified by the administration as a way to reindustrialize the U.S. and protect domestic jobs, the announcement comes at a time of declining global trade and growing economic competition between the U.S., China, and Europe. The immediate consequence: historic drops in global stock markets, including New York, Paris, Frankfurt, Zurich, Hong Kong, and Shanghai, driven by fears of a potential global recession.

2. Specific Impact on the Luxury Sector

The luxury sector, one of the most globalized in the world, was hit particularly hard. Luxury brands depend heavily on cross-border trade, complex global supply chains, and high-net-worth consumers across the U.S., Europe, and Asia.

LVMH (France)

Stock drop: -5.62% in a single trading session.
Market value lost: Approx. USD 30 billion.
Bernard Arnault’s net worth: Down by USD 6 billion, as LVMH stock plunged.
Cause: The 20% tariff on luxury imports to the U.S. raised prices on brands like Louis Vuitton, Dior, Bulgari, and Fendi, making them less competitive.

Kering (France)

Stock drop: -7.51%.
Key brands affected: Gucci, Saint Laurent, Bottega Veneta.
Risk: Roughly 30% of global revenue depends on the U.S. market, now threatened by rising import costs.

Hermès (France)

Stock drop: -3.51%.
U.S. exposure: About 18% of global sales.
Note: Hermès, known for controlled production and exclusive distribution, is still vulnerable to shifts in U.S. consumer sentiment.

Richemont (Switzerland)

Stock drop: -6.32%.
Brands impacted: Cartier, Van Cleef & Arpels, Montblanc.
Risk factors: Significant revenue from both the U.S. and Asia—now under tariff pressure.

3. Luxury Automotive Sector: Another Major Casualty

The luxury car market, another symbol of prestige, also saw sharp losses following a 25% tariff on imported vehicles:

Volkswagen Group (Audi, Porsche, Bentley)

Volkswagen stock: -4.42%.
Porsche stock: -3.06%.
Affected models: Porsche Cayenne, Audi Q7/A8—all manufactured in Europe.
Additional risk: Mounting pressure to relocate or restructure production to avoid long-term cost increases.

BMW Group

Stock drop: -3.55%.
Critical issues: Plants in Mexico and Germany could face complications.
Strategic concern: The company exports nearly 45% of its total production, much of it to the U.S.

4. Other Luxury-Related Sectors

Fashion and Accessories

Nike: -14.4%.
- Highly dependent on Asian production (Vietnam, China), Nike now faces additional costs both in manufacturing and logistics.
Ralph Lauren: -16.3%.
- Hurt by rising costs of textiles and accessories sourced from Asia.

Alcohol and Fine Spirits

Moët Hennessy (LVMH):
- Though no precise figure was released, analysts expect a sharp hit to exports of champagne, cognac, and other spirits.
- China—world’s top cognac market—may respond with retaliatory measures, threatening brands like Hennessy and Dom Pérignon.

5. Economic Analysis and Future Outlook

Consumer prices and behavior shifts

Prices of luxury imports in the U.S. could increase by 2% to 5%, discouraging demand from middle-upper segments.
Consumers may turn to local brands, pre-owned luxury markets, or experience-based luxury less affected by tariffs (e.g., hospitality, events).

Systemic risk of recession

Leading macroeconomic institutions now estimate a 60% chance of global recession if tariffs remain in place or escalate.
Luxury supply chains could face major disruptions, especially for brands not yet diversified across regions.

Institutional responses

The European Union, led by France and Germany, has urged companies to pause investments in the U.S. until further notice.
China is convening an emergency summit with major exporters in luxury and tech sectors, signaling likely countermeasures.

6. Key Takeaways and Strategic Recommendations

Summary of losses:

The luxury sector has lost over USD 100 billion in market value in less than 48 hours.
Brands with high U.S. exposure and limited supply chain flexibility are the most vulnerable.
The short-term outlook is highly uncertain, with risks to both sales and brand perception.

Strategic recommendations:

Restructure supply chains, prioritizing nearshoring and risk diversification.
Invest in direct-to-consumer digital channels to bypass intermediaries and maintain control over pricing.
Review pricing strategies to preserve margins while remaining competitive.
Expand into emerging markets (India, Africa, Southeast Asia) less affected by U.S. policy shifts.
Engage with institutional and regulatory bodies to monitor risks and influence future policy directions.

7. Looking Ahead: The End of Global Luxury as We Know It?

While the luxury sector has traditionally been resilient during economic downturns, the current environment represents an unprecedented structural challenge. The shift in global trade rules demands a rethinking of logistics, pricing, and even brand identity.

Global icons like Louis Vuitton, Gucci, and Hermès may face the need for “symbolic relocalization”, where brand storytelling becomes more tailored to localized audiences and less dependent on global narratives. In this new era, hyper-personalization, local sustainability, and operational resilience will define long-term success.