The Tariff Exposé

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For an industry that prides itself on resilience, mystique, and the ability to charge whatever it pleases, luxury has recently been forced into an uncomfortable position. Tariffs didn’t destroy luxury, but it did cause brands to explain themselves. They exposed who actually deserves to be called “luxury” and who was simply riding the wave of aggressive pricing and clever marketing.

Let’s start with the numbers. Global luxury sales declined roughly 2% in 2025, marking the first meaningful slowdown in years. That may sound modest, but in a sector accustomed to uninterrupted growth, it’s a big deal. At the same time, prices across luxury goods have already risen 30% or more since 2019, and tariffs have only added fuel to that fire.

When the U.S. and other markets imposed tariffs on imported goods (particularly those tied to European manufacturing) the immediate impact was simple: higher costs. Luxury brands who  are heavily reliant on global supply chains (Italian leather, Swiss movements, French ateliers), suddenly found themselves paying more just to maintain the illusion of effortlessness.

So what did they do? Exactly what you’d expect. They raised prices. Again.

Some brands were refreshingly blunt about it. Hermès, for example, openly adjusted U.S. pricing to offset tariff pressure. No drama, no apologies, just arithmetic. When you occupy the very top of the pyramid, you can do that. Your customer isn’t price-sensitive; they’re allocation-sensitive. “If you want in the club…..you pay” But here’s where things get complicated. The luxury market doesn’t run solely on billionaires buying crocodile Birkin bags. It runs on a much larger, quieter engine: the aspirational customer. The lawyer buying a Rolex Submariner to celebrate a promotion. The couple stretching for a Chanel bag for Christmas, the enthusiast justifying a $10,000 watch because “it will hold value.” Those maybe real, but that customer has limits, and tariffs, layered on top of years of price inflation, started to find them.

Affluent consumers didn’t suddenly become poor, but they did become more selective. Reports in 2025 showed a noticeable “pause” in discretionary luxury spending, particularly in entry-level categories. In other words, the customer who once bought two pieces now buys one. Or none.

This is where the divide becomes obvious. At the very top, true luxury brands held their ground. Hermès continued to thrive. Ultra-high-end watchmakers with limited production remained largely insulated. People still beg for Patek, Vacherone and off catalogue Rolex. These brands don’t compete on price because they operate on scarcity, heritage, and control. They own it.

Below that, things get shakier. “Accessible luxury”, a category that quietly ballooned over the past decade has started to feel the pressure. These brands depend on volume and a broader customer base. They can’t endlessly raise prices without consequence, yet tariffs squeeze their margins just the same. It’s an uncomfortable middle ground: too expensive for mass appeal, not exclusive enough to command blind loyalty.

In the automotive sector, where tariffs hit with less subtlety. European manufacturers like Audi and BMW have already reported billions in tariff-related cost pressures, with margins tightening and forecasts trimmed. (Don’t get me started with the EV disaster. Mercedes is offering 10-15K OFF MSRP on EV models, Porsche is as well) Unlike a handbag, a $90,000 vehicle doesn’t absorb a 10–15% increase without pushback. Financing, incentives, and dealer networks all feel the strain. When is the last time you saw an add with 0% financing? The answer: 2019

So no, tariffs didn’t “hurt luxury” in the way headlines might suggest. The champagne didn’t stop flowing, but they did remove the buffer. They forced brands to confront a simple question: Do customers want this or were they just willing to pay for it?

If you’re at the very top, tariffs are an inconvenience. You adjust, you move on, you raise prices and your clients barely blink. If you’re anywhere else, tariffs are a stress test.