Are we headed for a price increase?
All eyes are on Hermès’ bottom line: are we due for another price increase? Despite what you may hear from other places and regarding other designers, an Hermès price increase is not at all predictable or straightforward. Although (at least in the US) prices go up either sequentially through January or at the end of January/beginning of February, sometimes the increases are minimal, sometimes substantial, sometimes not at all (in fact I recall a few times when scarf prices actually decreased).
As it stands now, EU prices have gone up, but they appear to be minimal, anywhere from 1-3% ; 90cm scarves went from €375 to €385, GM shawls from €950 to €965, Twillys from €150 to €160. Some bags have increased (Bolide 31 up €250), some have not (Trim duo 24 unchanged). Likewise, UK increases have been minimal, with SLG prices increasing anywhere from £5 to £30 depending on the item.
In Asia, prices have gone up quite a bit further. Following the late 2020 price increases of about 3% in China, prices in in Australia and Singapore have followed suit, with increases of around 3-5% across the board (although some bag prices in Singapore actually decreased).
Are we going to be paying more due to international tariffs?
All this is happening at the same time as we are hearing about impending US import tariffs of 25% on certain items from France (cosmetics and handbags). These were scheduled to take effect on January 6 but were postponed. Although as of this writing the imposition of these tariffs has been put on hold indefinitely, I wanted to let you know what they entailed, in case this should wind up taking effect sometime in the future.
I have taken a look at the United States International Trade Commission Rulings and Harmonized Tariff Schedule regarding handbag imports. It seems that while the headline number for the tariffs were a whopping 25%, in actuality, it varied from 3.7% (for exotic SLGs made of reptile) to 9% (most regular leather bags). The relevant sections were as follows:
Section VIII, Chapter 42: Articles of leather; saddlery and harness; travel goods, handbags and similar containers; articles of animal gut
4202.21.30 This section would affect exotic bags made of reptile skins, such as crocodile, alligator and lizard.
Tariff Rate: 5.3%
4202.21.90 This would apply to most Hermès bags.
Tariff Rate: 9%
4202.22.45. This may apply to certain bags, such as the cotton totes.
Tariff Rate: 6.3%
4202.22.60. This may apply to certain bags.
Tariff Rate: 5.7%
4202.31.30. Exotic SLGs.
Tariff Rate: 3.7%
4202.31.60. Leather SLGs.
Tariff Rate: 8%
So, according to the schedule, even if the import tariffs were to go into effect, it wouldn’t be anywhere near the supposed 25% rate. Although 9% (the maximum relevant rate) on an $8,000 item would be an additional $720 – not an insignificant amount – that’s far less than the $2,000 a 25% tariff would impose. Of course, one would presume that this additional cost would surely have priced some customers out of the market, but that’s never seemed to be a concern of Hermès corporate – and robust reseller sales, sustained over the past 15-20 years, tells us that there are plenty of customers who are still willing to pay more.
Will US Hermès prices rise along with the rest of the world? Will the indefinitely suspended import tariffs also be imposed on top of that? Stay tuned…