After what HSBC dubbed “greedflation” — substantial price hikes amid euphoric post-pandemic purchasing — European luxury goods are set to become even more expensive in the wake of the Trump administration’s tariffs.

“We expect all brands to implement price increases in single-digit percentage in the U.S. in the coming weeks and to identify cost-savings opportunities in their U.S. and global operations to mitigate some of the tariffs impact,” Thomas Chauvet, luxury analyst at Citi, said in research note Thursday, highlighting worse-than-feared tariff levels affecting Swiss watches and Thailand-made jewelry, and better-than-expected levels for such U.K. brands as Burberry.

Tariffs were announced at 31 percent for goods made in Switzerland, 20 percent for those made in Europe and 10 percent for U.K.-made goods.

“The tariff impact to sector EPS might be overdone considering luxury companies’ intrinsic pricing power and relatively low price elasticity of demand,” Chauvet wrote. “However, how the U.S. [and global] luxury consumer responds to potentially reduced global economic growth remains unknown.”

According to Citi, the publicly traded companies with the highest revenue exposure to the U.S. in descending order are Birkenstock (47 percent of sales generated in the U.S.), Brunello Cucinelli (34 percent), Pandora (31 percent), Ferragamo (31 percent), LVMH Moët Hennessy Louis Vuitton (25 percent), Kering (24 percent) and Richemont (20 percent).

Brunello Cucinelli Fall 2025 Ready-To-Wear Collection at Milan Fashion Week — Brunello Cucinelli fall 2025 Courtesy of Brunello Cucinelli

Meanwhile, the stocks least likely to be impacted given lower U.S. exposure are Moncler (13 percent), Swatch Group (15 percent), Prada Group (16 percent), Hermès International (17 percent) and Burberry (19 percent).

In Europe, shares closed Thursday down 10.7 percent for Pandora, 9.7 percent for Richemont, 6.1 percent for Swatch, 7.6 percent for Brunello Cucinelli, 5.6 percent for LVMH, 7.5 percent for Kering and 3.5 percent for Hermès.

“Those companies with strong pricing power/higher-end positioning such as Hermès and Richemont might find it easier to mitigate the impact through pricing,” Chauvet noted.

Meanwhile, “weaker brands may decide to absorb a part of the cost instead of passing everything to the consumers which would then affect their gross margin,” Barclays said in a research note.

The bank estimated price increases across personal luxury goods at 4 to 10 percent since “tariffs are applied to the import price, rather than to the retail price.”

It was not immediately clear if the tariffs announced Wednesday night were new rates, or in addition to current.

“If the new 20 percent tariff includes this, we are discussing nothing. If it is incremental, we are discussing very little,” Luca Solca at Bernstein said in a research note. “What we should worry about, in case, are the second- and third-level impacts of the new American policies, if they precipitate a sharp global recession and stock market correction.”

Jean-Christophe Babin, chief executive officer of Bulgari and LVMH Watches, said it was too early for companies to act.

“First, we [everybody] have to understand [what is] behind the stated numbers we’ve seen on TV yesterday,” he said at the Watches and Wonders fair in Geneva.

Pandora, which produces its jewelry mostly in Thailand, but also Vietnam, India and China, already calculated the total impact of the tariffs “before any mitigating actions” at 1.2 billion Danish kronor, or about 160.8 million euros.

It said it should be able to fully mitigate the 250 million kronor related to Canada and Latin America within the next 12 months.

“Pandora is actively exploring further mitigating actions to address the potential remaining DKK 950 million impact, including price increases and supply chain set-up,” it said.

European fashion bodies and executives started to weigh in, expressing dismay about the tariffs.

“This decision is like going back in time; it will lead to a lose-lose relationship within the global textile industry. Euratex stands for free but fair trade, based on common rules which are respected by all; the EU and the U.S. should lead by example, and promote high quality and sustainable textile products,” said Dirk Vantyghem, director general of European apparel and textile organization Euratex.

The organization added said that the U.S. is the EU’s fifth most important trading partner, and 12th largest supplier to the EU, with total trade exceeding 9 billion euros.

“American customers enjoy high-end fashion items, but also technical textiles coming from Europe. Adding a 20 percent duty will hamper that relationship,” Vantyghem said.

Colin Browne, CEO of Cascale, noted that the tariffs will have particular impact on the apparel industry since only 3 percent of the U.S. clothing is manufactured domestically.

Formerly the Sustainable Apparel Coalition, Cascale’s alliance composes 300 consumer brands, including Aritzia, Everlane, G-Star Raw, Gap, Guess, H&M, J.Crew, Lululemon, Mango, Uniqlo parent company Fast Retailing and Zara parent company Inditex, among several others, as well as retailers and manufacturers.

“We live in a globally interdependent world. Responsible business practices and quality manufacturing are not confined within any single country’s borders, including the U.S. As our industry navigates the turbulence ahead, maintaining strong international partnerships rooted in mutual respect and pragmatism is critical,” he said.

Browne highlighted how this will impact garment workers in developing countries including Vietnam, Bangladesh and India, among others.

“Sudden disruptions caused by these tariffs could undermine decades of progress in social and economic stability, pushing vulnerable communities deeper into poverty,” Browne added. “Now, more than ever, industry leaders must unite in collective advocacy to ensure global trade policies support not just economic stability but also environmental sustainability and social equity.”

“The new tariffs the USA has applied on goods from the U.K. will be of great concern to British fashion brands, which will have to make the problematic compromise between raising prices or eating into already slim margins on U.S. sales,” said Caroline Rush, CEO of the British Fashion Council.

She added that, as a result of tariffs, American fashion consumers will likely see prices rise on imported fashion.

“The U.S. is a key market for U.K. fashion exports, and any governmental action that could dampen U.K. trade or opportunity within the U.S. market should be avoided or reversed where possible,” Rush said. “The BFC is working closely with the U.K. Department of Business and Trade to advocate for tariff-free entry for U.K. fashion goods into the U.S. market and to support global U.K. fashion exports.

“We will continue to voice the fashion sector’s concerns to the U.K. and U.S. governments. We encourage brands impacted by the change in the U.S. tariff regime to provide evidence and data to the BFC so we can make the strongest possible case,” she added.

Adam Mansell, CEO of the U.K. Fashion and Textile Association, said: “The U.S. is the U.K.’s second-largest export market for fashion and textiles, and the new U.S. tariff regime will benefit no one. It will lead to reduced exports from the U.K. and will impact U.K. fashion and textile manufacturers, at a time when they are already facing unprecedented cost increases.

“Although the 10 percent tariff on U.K. exports is lower than the 20 percent on EU products, it adds to existing tariffs, making some luxury fabrics from the U.K. subject to a 35 percent tariff in the U.S.,” he continued. “At the same time, U.K. retailers and brands that manufacture in countries such as Vietnam and Bangladesh and ship directly to the USA will face huge increases in costs. The new U.S. tariffs will also mean increased prices for U.S. consumers, and it will make the cost of raw materials for U.S. manufacturers more expensive.”

Helen Brocklebank, CEO of Walpole, said: “We are deeply concerned about the impact of the newly announced tariffs on the British luxury sector.”

She noted the sector’s exports account for 22 percent — or 12.3 billion pounds — of the U.K.’s total exports.

“These tariffs will not only create barriers for U.K. businesses, but also penalize American consumers who value the creativity, craftsmanship and heritage of British luxury goods,” Brocklebank said.

“We are in continued contact with the U.K. government, and we welcome their intensive efforts to reach a resolution with the U.S. administration and continue to support a measured, diplomatic approach to securing a fair and mutually beneficial outcome,” she continued.

In Italy, Sergio Tamborini, president of Confindustria Moda, said: “Fashion, in its global dimension, is being called upon to redesign its routes and supply chains. Given the structure of the supply chain, the main concerns are not only the U.S. tariffs on European products and their direct impact in terms of lost revenue, but also the broader effects of these measures on production and distribution stages, starting from raw material sourcing to garment manufacturing.”

He said that the additional challenge is to chose between “further adjusting their pricing or selecting new destinations for production and trade.”

To address international challenges, Confindustria Moda is working with institutions. “However, the solutions adopted by Brussels will also be crucial in shaping Europe’s protectionist policy,” Tamborini said.

According to Confindustria Moda Ufficio Studi Economici, the trade of textile-clothing from Italy to the U.S. from January to December 2024 amounted to 2.8 billion euros, reflecting a decline of 0.7 percent compared to 2023.

During this period, in the ranking of top export destinations, the U.S. ranked as the third-largest market, accounting for 7.4 percent of total textile-clothing exports, with a predominant share of the clothing sector at 2.3 billion euros. The best-performing sectors were silk spinning, home textiles and hosiery.

“Inevitably, these areas are expected to experience a contraction in their growth prospects in the United States,” Tamborini concluded.

Members of the European fragrance and cosmetics industry also expressed regret about the upcoming tariffs.

France’s beauty association, the Fédération des Entreprises de la Beauté, or FEBEA, said in a statement that it “deplores” the decision the U.S. administration in regard to 20 percent tariffs on goods imported from the EU.

France, where beauty produces are the second-largest export category overall after aeronautics, is the largest European fragrance and cosmetics exporter to the U.S. France is followed by Italy, Spain, Germany and the Netherlands.

The U.S. has always been a key geography for beauty players, but it is even more so now as the Chinese market continues facing headwinds much longer than expected after the coronavirus pandemic.

Multinational companies, such as Beiersdorf, L’Oréal, Unilever and LVMH already have large manufacturing footprints in the U.S., so will be less hard-hit than mid- to small-sized beauty makers, which generally do not produce on U.S. soil.

“This measure will necessarily have an impact on the French cosmetics industry,” FEBEA stated, referring to the recently announced tariffs. “With nearly 3 billion euros of products exported in 2024, half of which are in perfumery, the United States alone represents 13 percent of the sector’s imports.”

FEBEA said until now transatlantic relations in the industry have been based on a balanced framework, without reciprocal customs duties.

“They are part of a long tradition of commercial cooperation, cross-investment and industrial establishments on both sides of the Atlantic,” continued FEBEA. “The United States will remain, as such, an important market for French cosmetics.

“The trade war only produces losers: It penalizes American consumers, faced with reduced supply or higher prices, while weakening European companies through a drop in their competitiveness or their margins,” said FEBEA.

The federation said it’s likely this is the start of a commercial escalation.

“It is essential not to respond with a logic of one-upmanship, but to build a united, calm and proportionate European response,” said FEBEA. “Since this is a measure targeting the European Union as a whole, only a community-wide response can be legitimate and effective.”

FEBEA noted other cosmetics exporting countries are also hit, with tariffs of 25 percent in South Korea, 24 percent in Japan and 34 percent in China.

“Beyond the difficulties of accessing the American market, this reconfiguration risks increasing competitive pressure on other world markets,” FEBEA said.

The federation said the response must be industrial as well as diplomatic and carried out across the continent of Europe.

“French cosmetics is therefore calling for a strengthening of the sector’s competitiveness in its primary market — Europe, [representing] 10 billion euros, or 40 percent of exports in 2024,” FEBEA said. “Our know-how, which cannot be relocated, remains a major asset. Defending the place of Made in France in the world requires a concerted, proactive and ambitious strategy.”

Millie Kendall, CEO of The British Beauty Council, said many of U.K. beauty brands’ products are manufactured outside of the country, where tariffs to be imposed are higher than 10 percent.

“A lot of makeup brands will probably manufacture about 70 percent of their goods in Europe, maybe about 15 percent in China,” said Kendall. “It’s such a mixed bag.

“It’s very challenging,” she continued. That’s not least due to the short period of time in which companies must strategy shift. “A lot of these businesses are small companies that are trading in the U.S., perhaps even for the first time,” said Kendall, adding alongside additional cost, “there’s so much administrative burden on these small businesses. In the U.K., 95 percent of the beauty industry are [small and medium enterprises].”