PARIS — In the wake of the Trump administration’s “extreme” tariffs and “looming stagflation,” Bernstein on Monday cut its 2025 growth estimate for global luxury goods to minus 2 percent from up 5 percent.
“Uncertainty, and the likely continuing rout in stock markets, is creating a self-fulfilling prophecy: a global recession,” said the report by luxury analyst Luca Solca, which he titled “Fasten Your Seat Belts.”
The downgrade came as stock markets in Asia and Europe continued to plunge, with the Shanghai Composite closing down 7.3 percent on Monday.
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At the end of trading on Monday, LVMH Moët Hennessy Louis Vuitton shares had lost 4.2 percent, Kering 3.9 percent, Swatch Group 3.6 percent and Compagnie Financière Richemont 1.8 percent.
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Solca reiterated that Bernstein is sanguine about “the first level impact of tariffs.…What concerns us are the second- and third-order effects: the uncertainty, recent stock market crash, USD devaluation and threat of a global recession.
“The negative second-, third- and fourth-level implications on the global economy, the financial markets and global currencies are just starting to appear. These would only be exacerbated if more countries — like China last week — will introduce countermeasures of their own, both against the USA and other players such as those addressed by the USA,” Solca said. “With no change in the context, we expect further downside.”
Europe’s big luxury players have so far been mum about the tariffs, with the exception of Ferrari, which said it will pass them on to consumers, according to Bernstein.
However, they are likely to get questions when they disclose first-quarter results, with LVMH kicking off reporting season on April 15.
Separately on Monday, Pascal Morand, executive president of the Fédération de la Haute Couture et de la Mode, said French fashion’s organizing body has put together a task force with economists “in order to evaluate and anticipate the impact of the measures, taking into account price and non-price competitiveness factors.”
He said in recent weeks, the federation has “closely followed the escalation surrounding aluminum and steel and a series of developments in the broader EU-U.S. trade relationship,” and it is currently “exchanging with its members and public authorities.”