Luxury brands, including Hermès and LVMH, are adjusting their pricing strategies in the U.S. due to the impact of new tariffs. Hermès announced it will increase prices across its U.S. product lines to offset the tariffs, effective May 1. This price adjustment will only apply to the U.S. market. LVMH is also considering price hikes to counteract the tariffs' effects.
The tariff policy, initiated by the U.S., has created market uncertainty, prompting analysts to lower growth forecasts for the luxury sector. The global luxury market is expected to grow at a slower pace of 1% to 3%, while emerging markets like India and the Middle East show strong growth potential.
LVMH has been proactive in shifting some production to the U.S., with Louis Vuitton operating three leather workshops in California and Texas. However, these workshops face challenges, such as a high leather waste rate due to a lack of skilled workers. Despite these efforts, expanding production in the U.S. remains challenging for European luxury brands.
Overall, the luxury market is under pressure, with recent earnings reports showing mixed results. Hermès reported a 7.2% sales growth in Q1, while LVMH saw a 3% decline. Analysts suggest that luxury brands focus on supply chain resilience and customer engagement to navigate future challenges.
