How might Trump's tariffs affect the luxury goods market?
Luxury clothes, cars and watches could take a hit in the coming months


Despite the 90-day pause on most of President Donald Trump's tariffs, 10% duties still remain. This trade policy could have a whipsawing effect on Americans' ability to purchase offshore luxury goods. The prices of basic necessities have already bounced up and down due to the tariffs, and the market for more high-priced items may also feel some pain.
When it comes to the foreign luxury market, high-end clothing will likely be the most affected by the White House's tariffs, especially if Trump were to renege on his 90-day pause. But luxury vehicles and watches, popular with Americans, could also end up in the crosshairs.
What did the commentators say?
Fears surrounding Trump's tariffs are "dashing hopes in the $400-billion-a-year luxury industry that wealthy Americans might help to pull it out of the biggest slump in years," said Reuters. Analysts now estimate that the global luxury market could fall by 2% in 2025; it was previously estimated to achieve 5% growth. Trump's tariffs could exacerbate this, as "European fashion and jewelry houses like LVMH's Louis Vuitton, Chanel and Richemont label Cartier had been counting on sales growth from wealthy Americans to help offset weak demand in China."
Subscribe to The Week
Escape your echo chamber. Get the facts behind the news, plus analysis from multiple perspectives.

Sign up for The Week's Free Newsletters
From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.
From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.
Some of these brands are "expected to draw" on their "pricing power to shield profits from tariffs, but investors are worried that shoppers who can afford $10,000 leather handbags and gold bracelets could tighten their purse strings against a darkening economic backdrop," said Reuters. And understated luxury designs "typically sell better in a downturn when it becomes a no-no for people to flaunt their wealth," said The Wall Street Journal. This creates a "headache for luxury brands" as they are already "under pressure to come up with eye-catching designs to reverse a slump in sales."
Any further tariffs are "likely to reverberate throughout fashion's supply chain," said CNN, but other luxury goods could be affected too, most notably cars. Tariffs could be "putting America's love affair with European luxury car ownership under threat," said Business Insider. The "prices of luxury status symbols such as Ferrari, Rolls-Royce and Aston Martin" are "virtually guaranteed to rise," because even as Trump issued his 90-day tariff pause, the "tariff on imported vehicles remains in effect." Luxury car brands have "already signaled that they will raise prices in response to the trade wars."
High-end European watches could face a similar fate. The U.S. is Switzerland's "largest export market for watches, making their trade relationship crucial to the country," said Fortune. Chinese demand wavered, and "watch companies have turned to Americans to fuel their sales." While these companies "will likely resort to hiking the prices of their exquisite high-end watches," brands "catering to the mid-level consumer are in more trouble."
What next?
If Trump reenacts his tariffs following the 90-day pause, it could have drastic effects in the U.S. and globally. If the "trade war triggers a global slowdown, demand in other crucial markets will suffer," said the Journal. Chinese consumers are "unlikely to feel like splurging on designer brands if Trump's 54% tariffs on the country's goods trigger an economic slump."
While Trump has claimed that his tariffs will turbocharge American manufacturing, most companies say that "high costs will keep them from moving manufacturing back to the U.S.," according to a CNBC survey. Even if manufacturing does move back, 81% of the companies surveyed "expect automation to be favored over workers."
A free daily email with the biggest news stories of the day – and the best features from TheWeek.com
Justin Klawans has worked as a staff writer at The Week since 2022. He began his career covering local news before joining Newsweek as a breaking news reporter, where he wrote about politics, national and global affairs, business, crime, sports, film, television and other news. Justin has also freelanced for outlets including Collider and United Press International.
-
Israel 'pauses' Gaza military activity as aid outcry grows
Speed Read The World Health Organization said malnutrition has reached 'alarming levels' in Gaza
-
US and EU reach trade deal
Speed Read Trump's meeting with European Commission President Ursula von der Leyen resulted in a tariff agreement that will avert a transatlantic trade war
-
July 28 editorial cartoons
Cartoons Monday’s political cartoons include cartoon villains, AI frying the planet, and more
-
Can Gaza aid drops work?
Today's Big Question UN's Palestinian refugee agency calls plan a 'distraction and smokescreen' as pressure mounts on Israel to agree ceasefire and fully open land crossings
-
'Spending is what card issuers are hoping you will do'
Instant Opinion Opinion, comment and editorials of the day
-
Trump executive order targets homeless
Speed Read It will now be easier for states and cities to remove homeless people from the streets
-
Florida judge and DOJ make Epstein trouble for Trump
Speed Read The Trump administration's request to release grand jury transcripts from the Epstein investigation was denied
-
Trump attacks Obama as Epstein furor mounts
Speed Read The Trump administration accused the Obama administration of 'treasonous' behavior during the 2016 election
-
Deportations: The growing backlash
Feature New poll numbers show declining support for Trump's deportation crackdown
-
Is Stephen Colbert's 'Late Show' cancellation an omen of something worse?
TODAY'S BIG QUESTION CBS said its decision to end the talk show was strictly business. But the timing and nature of the announcement has some observers wondering if there's more at play behind the scenes.
-
Citizenship: Trump order blocked again
Feature After the Supreme Court restricted nationwide injunctions, a federal judge turned to a class action suit to block Trump's order to end birthright citizenship