The US is a key target for the majority of luxury, fashion and beauty executives. Will President Trump’s tariffs change how leaders across the industry are approaching business in the US?
For many, it’s too soon to say. Earlier this month, the Trump administration enacted 10 per cent tariffs on goods from China, but paused a 25 per cent tariff on trade partners Canada and Mexico, which are still on hold. An executive order signed on 13 February would enact reciprocal tariffs on any trade partner that hit the US with duties.
The uncertainty is cause for concern for some executives, while others say that pricing and manufacturing decisions could be affected if the trade war escalates. Some say they anticipate minimal impact. We gathered the comments from executives in recent earnings calls about how they’re anticipating the impact of tariffs.
Bernard Arnault, CEO and chairman of LVMH
In the US, people are welcoming you with open arms, taxes are going to go down to 15 per cent, the workshops that we can build in the US are subsidised in quite a few states, and the American president encourages this practice. The market is developing fast.
I’d rather not say anything about taxes. I prefer to take action quietly, calmly.
François-Henri Pinault, CEO of Kering
When it comes to a potential US tariff rise, of course it’s difficult to see what’s going to happen. For sure, it’s not a matter of protecting the US luxury industry. It’s not the point, more a lever in terms of negotiation with other industries, other components of the trade between Europe and the US. So having said that, I have no more information, of course, about that. We’ve been already operating in big countries, big markets where we have import duties — China, for instance. So we know how to manoeuvre that. We will have to review our pricing strategy, of course, to take into consideration the tariffs.
What we know is that one impact of a rise in tariffs will be the dynamism of US tourism in Europe, for instance, which would have a big push — not offsetting, for sure — on the impact in America. But we know how to manoeuvre that. I’m not that worried about it, but let’s see what happens.
Most of our brands we are producing in Italy and France, and this is part of the promise that we bring through our products, through our heritage, to the consumer. We are selling part of our culture, be it an Italian culture or a French culture. So we have no plan of producing [in the US] to counter the tariff. It makes no sense.
Axel Dumas, CEO of Hermès
One of the things that worries me most is the evolution of geopolitical relations at the moment: we produce in France and we sell all over the world, so we still need to trade. After that, it’s not tariffs that worry me, it’s more the tensions between the nation.
Michael Kliger, CEO of Mytheresa
No one knows at the moment, it’s a lot of speculation, which in itself is not helpful — uncertainty is never good for the consumer. If brands now price their products for the US, how do they price them based on high tariffs, no tariffs, low tariffs — and how do we [at Mytheresa] price products? You could argue that in the short term it helps because people will think European brands are going to get more expensive so they may shop now before the tariffs kick in. Or products could get really held up because brands could try to shift their supply chains to avoid some of the tariffs. We don’t know.
Kate Ferry, CFO of Burberry
It’s really too early to comment too much. We are going to just have to wait for the details. We’re very much focused on what we can control, and in the end, we are a global company so America is part of our business; it is certainly a real opportunity and we’ve really boosted our recent performance there.
Scott Roe, chief financial and operating officer of Tapestry
[Our] guidance embeds the expectation for an additional 10 per cent tariff on goods imported from China into the US beginning 4 February, which is expected to have an immaterial impact on fiscal 2025 results, given our limited manufacturing exposure to China. We continue to monitor the landscape closely and are developing potential mitigating actions as needed. To note, we do not have production in Canada or China.
Justin Picicci, CFO of Ralph Lauren
Our teams continue to leverage our agile and diversified supply chain to manage through global industry disruptions. With regards to the recently announced US tariffs on goods from China, Mexico and Canada, we currently anticipate a minimal annual impact.
Looking ahead, our outlook remains based on our best assessment of the current geopolitical backdrop, as well as the macroeconomic environment. This includes inflationary pressures, tariffs and other consumer spending-related headwinds, supply chain disruptions and foreign currency volatility, among other considerations.
Nicolas Hieronimus, CEO of L’Oréal
The consumption of particularly premium goods in the US will be dynamic. Of course, there are many unknowns on the situation of the US market, the tariff strategies may evolve and then whether it will have an impact on local inflation is hard to predict. But today, we see the US as a land of opportunity.
Sue Nabi, CEO of Coty
As is evident in the last few weeks, the global geopolitical and tariff situation remains quite fluid, further adding to the broader uncertainty. Having said that, our teams have been planning for several different scenarios with action plans to minimise the potential impact on Coty. For context, our sourcing from China, Canada and Mexico into the US is fairly minimal. As we contemplate a potential 10 per cent tariff on finished goods shipped from Europe into the US, or potential retaliatory tariffs in North America, this could represent a few points of impact to our annualised EBITDA. In the meantime, we are already making adjustments in our product flows and sourcing, including having some extra inventory on hand in the US and shifting more of our mass fragrance production to our North Carolina plant. And of course, pricing remains an additional lever, particularly in the relatively price-inelastic prestige beauty market.
Jennifer Wong, CEO of Aritzia
The news is changing all the time. That said, we have been systematically diversifying our manufacturing for years, since our IPO. The great majority of our product is manufactured outside of China. What is most important to us, even with all of this discussion around tariffs, is that we will focus on ensuring and protecting the quality of our product. This means we have long-standing partnerships with manufacturers and partners and can count on them to produce the quality we’re after — so we’re not making any knee-jerk changes. That said, if there was a 10 per cent [tax] on goods from China, that would be less than approximately a 30-basis-point impact on us, and that is before further mitigating action. Given that we have a diversified sourcing strategy, I think we have good things in place that allow us to hedge against disruptions, whether it be a tariff or even natural disaster risk.
Fernando Fernandez, CFO of Unilever
We’ve seen some return of inflation to our basket of commodities. It is not a general increase, it is really concentrated in a few families of materials. It is very difficult with the start-stop [nature] of tariffs and the significant moderating currencies to predict the material inflation. [Inflation] will drive some acceleration of pricing, hence our guidance of further balance between volume and pricing, and we expect pricing to materialise from Q2 onwards.
With additional reporting by Madeleine Schulz.
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