FT News Briefing
How tariffs are affecting luxury goods
Apr 21, 2025
Lauren Indvik, the FT's fashion editor, delves into the rocky landscape of the luxury goods industry amid current economic turbulence. She highlights how Trump’s trade policies and tariffs have disrupted growth, making 2025 ambitions look bleak. The conversation reveals divergent financial fates among brands like LVMH and Kering, and she discusses shifts in consumer behavior, particularly in China. Additionally, the podcast touches on brands reevaluating their supply chains, moving away from China to adapt to new challenges.
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Quick takeaways
- The luxury goods industry, previously buoyed by post-pandemic demand and price hikes, is now facing a sales decline due to economic instability.
- Rising inflation and tariffs are causing luxury consumers to reconsider their spending habits, significantly impacting brands like LVMH and Kering.
Deep dives
Post-Pandemic Surge and Subsequent Slowdown
The luxury industry experienced a notable surge in demand following the initial pandemic lockdowns, as consumers with accumulated savings began treating themselves to high-end goods. This period saw significant sales growth, driven not merely by increased purchasing but also by substantial price hikes, with some products, like Chanel bags, nearly doubling in price. However, this growth has since been tempered by rising inflation and a shift in consumer sentiment, with many questioning the rationale behind such high expenditures on luxury items. As a result, the sector is now grappling with a slowdown in sales and changing purchasing behaviors, particularly influenced by economic conditions.
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