Last week, the U.S. administration unveiled details of new tariffs aimed at addressing ongoing trade imbalances with global partners. The move marks the beginning of a broader effort to renegotiate trade terms and respond to longstanding barriers faced by American exports.
The History of U.S. Tariffs Condensed into Four Sentences
U.S.-imposed tariffs accounted for the majority of the country’s revenue from the late-1700s until 1913 when the Income Tax was introduced. The use of tariffs further decreased during the 1930s and 40s, during which the U.S. signed 32 reciprocal trade agreements.
After World War II, in an effort to encourage economic recovery and promote free trade, we joined 1948’s General Agreement on Tariffs and Trade (later called the World Trade Organization), and ultimately eliminated most import tariffs.
Since then, the U.S. has kept its import duties low while U.S. exports were increasingly subjected to duties (ranging from 11 to 50%) and barriers to free trade – such as licensing restrictions, currency manipulation, and excessively restrictive regulations – elsewhere.
The new import tariffs are intended to encourage the U.S.’s trading partners to lower their tariffs and return to the economics of free trade and reciprocity. As a result, goods imported from the European Union – where 70% of the world’s luxury products are produced —will now be subjected to a 20% import tax.
A Mixed Bag of Financial Implications for Luxury Companies
Of course, while the United States is the largest consumer of luxury goods, each company has its own exposure to these tariffs. Most face a mixed bag of relevant and related financial issues. For example, LVMH and Kering earn 25% of their revenues from U.S. sales; Hermès earns 17%.
While most luxury companies saw profits slump last year, Hermès was one of the very few that boomed. However, LVMH owns several production factories located in the U.S.; these produce about 50% of the LVMH products sold here, so only about half of their products are imported.
There is a lot of talk about what effects these tariffs will have on U.S. demand for luxury products; some predict a notable effect on demand and a possible boom in the secondhand luxury market as a result, while others say demand won’t be affected very much at the high end, especially for a company like Hermès, considering that their most in-demand products already fetch higher prices at resale due to lack of availability.
Is Another Round of Price Increases Right Around the Corner?
If price increases are coming, they are expected to be about 6 to 7%. However, at this early date, most luxury companies appear to be taking a wait-and-see position, particularly while numerous countries appear poised to negotiate with the U.S.
In February, Hermès Executive Chairman Axel Dumas promised, “If duties increase, we’ll increase our prices accordingly,” as of this writing, Hermès, along with the other luxury fashion houses, has not announced any price changes.
This may be partly due to the hope that the current tariff situation will not last very long and partly because many fashion houses have already increased their prices within the past few months. The prospect of tariffs may have been accounted for during those recent price adjustments.
Yearly price increases (“greedflation“) have become an annual undertaking for many luxury fashion houses regardless of any external factor other than the mere changing of the calendar.
Still, while the Hermès clientele can generally withstand another price hike, more weakly positioned houses may not have the same leverage. Some, including Chanel, Dior, and Louis Vuitton, have already priced their products out of the reach of many of their clients.
I find it disturbing that Purseblog is publishing MAGA propaganda.
I find it disturbing that anything written related to macroeconomics and how it affects consumers is now MAGA propaganda. “The new import tariffs are intended to encourage the U.S.’s trading partners to lower their tariffs and return to the economics of free trade and reciprocity.” This is literally taught in public high school. The writer could have taken it out of any textbook in any state in the continental US regardless of its political standing or voting population.
I 100% agree with you. It’s such a current problem with everyone. Just because the US isn’t giving it away for free anymore, doesn’t mean we’re going MAGA 🤣🤣🤣🤣
Hmm, what are you giving away for free? The consumer pays the extra $$ in tariffs not the foreign government.
It’s actually not very clear what the objective of the tarrifs is, also the tarrifs the E.U. imposes are actually very low and the numbers floated are inaccurate and conveniently avoid mention of services exported by the US. VAT is not a tax is it more like a sales tax charged in the US and applies to all goods imported or otherwise. Paragraph 4 reads like “facts” you’d find on Fox. Tarrifs incoming….
Be that as it may my point was that merely discussing the topic on a blog for expensive purses does not make the writer a Maga propagandist. I understand its subjective.
I have a PhD in economics… I am sorry your high school education failed you.
Oh wow so a PhD says it all. Yikes
You are really coming after me today with the insults. You called me a clown and now this subversive comment about something written by the producers of this blog, about designer handbags. They even verified as I did that AI was used to confirm the article had no political views or errors. Your expertise could be used elsewhere than insulting others on a blog about designer handbags .00008 percent of the current US population can afford. This is a waste of your expertise and elevated education, to be sure.
The problem is that right now with all the posts about tariffs, AI is taking Trump’s tariff chart as true when it is not. AI is not a reliable narrator of the situation.
I am private equity investor and I have found AI to be very accurate regarding the current tariff situation, which is still to soon for the outcome and final word to be determined. This site does not appear to be politically motivated, it is merely stating the “current” facts.
Any anon can say they have a PhD.
lol
Being bullied on a handbag blog was not on my 2025 bingo card. It’s time to take up pickle ball. I may shed a few pounds!
Purseblog has turned into Instagram in some ways that people say whatever they want under the guise of anonymity. I asked an honest question and the group that came after me was appalling. I simply asked if Hermes would transfer a bag from one store to another on vacation while I traveled. So disappointing the few people that responded culminating in why would I think I’m gonna get a bag anyway. What a horrible group of people, always on attack mode. To be noted, I currently have three bags and have sold one. There’s no doubt in my mind that I will come home with a bag.
Framing this article incorrectly does not help anyone. It is simply explaining the implications of the Orange Baboon’s tariff policy.
Unfortunately, the issue is that the article is framing the question of tariffs and the implications of trade deficits incorrectly.
I am sorry you feel like we’re pushing propaganda. The intention was here to provide informative, consumer-focused insights for luxury buyers that visit our site.
We have never been a political site and never will be. However, we will cover news that will impact the overall pricing of the luxury market. Our intention was to deliver this information neutrally, and I have reworded a few things to ensure it is as neutral as what we intended.
There are comments all over purseblog that are bullying, rude, insulting etc…you need to do a better job monitoring the comments. This is a site for people to discuss handbags. It’s not Reddit. It’s turning into the Wild West in the comment section.
The issue is some people think it’s rude when someone disagrees with them.
So true. Can’t people just agree to disagree? For every expert that supports an issue, backing up their views with citations and charts and research, there’s an expert on the other side of the aisle doing the exact same thing. There’s nothing wrong with open dialogues going back and forth. I almost always learn something taking in opposing views, they don’t always change my mind, but it certainly makes me aware of how the other person frames their view, which never hurts. Trading personal insults is only going to fuel more divide, and not constructive to any issues at hand. Plus, as Thomas Sowell says, there’re no solutions, there are only trade-offs. If someone really wants to learn about a political issue, the tPF is not exactly where you get your feed for the day. Asking the Mods to clean up the comment sections is like censoring free speech. Everyone’s free to opine, and others are free to ignore and move on.
I hear you and we’re trying to sanitize the comment section.
Good idea. I am new to this site and frankly surprised and dismayed with some of the
arrogant and angry posters. This site is about handbags and it seems there are some out there that want to create negativity and insult others. Keyboard warriors that take the liberty to be rude as they hide out-of-site from others.
I’m sorry the editor/writer felt pressured to reword the article. That deprives those of us who didn’t even have an opportunity to read the first version. I’ve been very curious to see how the new tariff policy would impact luxury goods. Why does one reader have the power to change the content for the rest of us?
This is a rewritten version? It’s full of misinformation about tariffs.
As you can see from the insults being thrown in the comments for defending the writer. Its a touchy subject to be handled with kid Dior gloves, lol.
They don’t only reword, they delete comments.
Rather than stating the Trump admin’s “intention,” frame it as a journalist should: “The Trump administration has said these new tariffs are intended to work as negotiating tools with other nations that it feels have taken advantage of the what it calls the relatively low levels of U.S. tariffs.” There is no argument that tariffs often work as a tax on end consumers, given that importers must pay the tariffs, which often also encourage domestic producers to raise their prices as well.
This is going on all over the internet. Merely explaining current economics isn’t propaganda.
Explaining economics would be fine, but this isn’t that. It’s parroting MAGA nonsense.
I am glad I didn’t read it before you turned your editorial eye on it, because it’s still hopelessly political.
The author has numerous inaccuracies and spends more time justifying the actions than talking about their consequences
According to AI the only “inaccuracies” are that the US is a founding member of GATT not a later joiner. The article is based on future economic impact and is unemotional or political. I wouldn’t be shocked if it was written by or revised by Chat gpt.
We are all unhappy with the election. We don’t need to scapegoat those who make a living informing us.
Overall Strengths
The breakdown of luxury company exposure to U.S. sales is accurate and insightful.
The note on secondhand markets and Hermès resale premiums is spot-on.
The blend of policy background with market impact is well done.
The problem with relying on AI is the old GIGO. At this time, AI will check to see if the numbers are consistent with other reported numbers, but not explore the source of that data.
I can manipulate data to show that the US is the largest consumer of luxury goods. But if I exclude food and automobiles, the numbers drop significantly – from 28% to roughly 18% of the luxury market. And if I start to define luxury (is le sportsac luxury? Is Target brand “Shade and Shore”?) the numbers slide back and forth.
Until AI is taught to evaluate credibility on a fundamental level, it is as useful as a brilliant first grader.
If you are a numbers geek, I’d strongly recommend “How to Lie with Statistics” by Darrell Huff. It’s an older book, but fascinating.
“According to AI” well, here is your first problem. 🤡🤡
I’m an engineer. If you think AI is a problem then you should donate the phone you’re typing on. We use AI daily to write code, plan projects and develop technology. Proofreading a document with AI is SOP these days. Be well..
We do not use AI to create any content on the site! This article is merely to share information about the tariffs and the implications they may have on the designer bag/luxury space.
I believe you. Just ran the article to find the “inaccuracies” other claimed it had.
Yes, we actually did the same thing and then researched again after comments saying we had inaccuracies!!
Our goal was to present information that impacts the bottom line of bag/luxury pricing. We have never been political, and will never be!
Great. Its a tool not a substitute. Keep doing great work. Even if we are not buying we still are interested in the bag drops!
I think what most are arguing about with regard to this article is that there is more nuance than “the US has a trade deficit, tariffs will decrease this trade deficit, the US has been subject to higher tariffs by other nations” etc. Any time any individual orders something that originates in another country, they are an importer and generally (unless an item is exempt, which is rare) subject to a levy that is paid at the time of receipt. That tax is paid by the recipient to the government that presides over the nation in which they have citizenship. It is not paid by the exporting country. In the US, there is a de minimus exemption that the current Administration just revoked for China, but remains in place for all other relevant parties, which allows importers to essentially receive $800 in merchandise untaxed.
US companies outsourced many of the manufacturing jobs that were the backbone of economies in the south and Midwest, but they also shut down what would be considered low-skilled industries (e.g. customer service call centers) for cost-savings and labor shortages. Americans have benefited from a heightened standard of living and when presented with the opportunity to equal or exceed their compensation in sectors that didn’t require as much manual labor, took it (e.g. the higher education industrial complex). This is why even though there’s always a need for day-laborers by agricultural employers, those positions are filled with immigrants.
Many US-based small businesses and companies import inputs from low-skilled labor to “manufacture” their end products (e.g. chemical compounds that are used for packaging) that would need a large amount of government investment and backing to be instituted here. Investors and the private sector are not going to just establish industries with high start up costs without a guarantee that they will receive a return. Generally, this is why governments will incentivize certain initiatives through tax cuts/deductions or grants. For the administration to say, “buy American,” but for there to be no, say, American-based polymer manufacturer, is part of the issue because all of a sudden, US-based organizations that use polymer to develop their products are facing an additional upfront cost of 20%+. That will most assuredly be passed on to the purchaser via a price increase.
With luxury fashion, those of us who enjoy the second-hand market, in particular Japan (or Hong Kong), now face an additional 24% levy on top of the relative 20% tax on handbags greater than $800. A second hand Birkin that may run $8,000 in Japan, but $11,000 via a US reseller is now still less expensive than the latter plus respective jurisdictional tax, but less appealing. This is definitely what the Administration would hope for in some regard—buy it from an American competitor!—but likely, we just won’t purchase at all (me!). Your favorite ice cream brand or crème brûlée dessert now faces a 47% increase in production costs due to the tariff on Madagascar. I’m not certain any US farms—already facing adverse economic winds—will decide to cultivate vanilla, at least in the short term. It will be even less advantageous if consumers change their preferences and opt for less expensive sweet treats. The problem has always been the focus on macroeconomics when it’s microeconomics, or the choices of self-interested individuals, to make financial decisions to their benefit.
Thank you for this contribution. This should be pinned on top. No, this should be an article on its own. Thorough and lucid.
(PhD applied economist here.) I peeked at this article during work and came back after work to much discussion. The primary misunderstanding with the article is that nothing about economic theory states there should be a trade balance with each individual trading partner. The US has many bilateral and multilateral trade agreements that allow for favorable trading conditions. We also violate Word Trade Organization trade rules ourselves and lose trade disputes. It all boils down to the fact that we are great consumers! Perhaps this a great opportunity to include a series of articles on the macroeconomics of luxury trade.
As Vlad said, we’d be happy for your perspective on this – please do reach out to us!
We have never claimed to have a background in economics so while I understand that this is a far deeper conversation, the idea of this article was to share how it may impact bags. The larger conversation we’d be happy to have someone with the background knowledge share a a contributor!
Thanks for contributing. Please reach out to us via the contact page if you’d like to contribute to an article about luxury trade macroeconomics. I am sure it’s a fascinating subject that deserves coverage – especially now in these uncertain times. Cheers!
THIS!
Friends, we just witnessed the biggest market manipulation of all times. Right there, live. This administration is so corrupt, it’s hard to believe no one has the guts to stand up and reclaim our country.
Purseblog, you have been a major disappointment in the past months, if not years but at least have some standards and a little bit of decency towards readers.
Don’t publish articles you introduce as “informative” and “neutral” when it is blatantly following the guidelines of the wannabe ONLY party in the USA.
It has become clearer and clearer you do not give a damn about anything else than your amount of readers and the clicks on your ceaseless advertisements but the minimum you could do would be to have intellectual honesty.
Unless you are not even able to understand on your own this article is WRONG from so many points of view and above all academically?
Good luck with your isolationist propaganda. Not even the Wall Street Journal is on your side.
And before I leave this madhouse that your spineless blog has become, please, do tell, who, do you think, in the whole world, will not be able to live without US products, when your whole gastronomy, fashion and culture are already a joke to us?
Your president is only harming his own people, and the poor, already doomed victims of the countries your governments ransacked in the past.
You can live without US products, but you can’t survive without US buying your products! You have already lost your mind by the communist propaganda, did you realize that your life and worth are depended on the creations of your ancestors from 200-500 years ago, you haven’t created any thing in recent 100 years. you called yourself well being cultured, fashionable, but your people only work 3 hours a day, American work 8-10 hours a day. Also most importantly life is not only about fashion or money, It is about God’s Grace and Freedom to think and to live, that you, European, has lost!
This is so hilarious 🤡
Girl, Europe is not a country, most of the historical patrimony there is much older than “200/500”, creation and production are not the same thing, and honestly, your remark on the working hours (I take that you are referring to France) would be hilarious were it not so tragically giving away the fact you did believe Emily in Paris was actually a documentary.
Freedom to think and live ? Girl you now have banned books and words. Wake up.
Coincidentally, I have been slowing down on any sort of frilly purchase, simply finding my interests sliding. Living in a 2nd rate city where life doesn’t really match my accessories. And I usually use them while traveling but that also limits to the ones travel well. Anyway, then THIS happened. I almost feel liberated from the urge for the pull between “retail therapy” and “materialist fatigue”. There, my silver lining. Sort of like someone wants to quite drinking and bam there’s prohibition, life simplified.
Please don’t get worked up or judging everything under the microscope. Life is crappy – trillions were wiped out in the last a few days – humor saves the day.
Be well.
The rest of the world looks at the completely unnessesary tariffs as Trump’s personal vendettas towards certain people, countries and prior US President’s decisions.
This is the way to make America go broke and take the world with you when it happens.
Trump doesn’t do this because it’s a smart thing to do, he does it because he can! He doesn’t care.
I found this article to be informative and look forward to updates as the situation develops. There is a lot of uncertainty out there.
I think that this article is very neutrally informative. People got mad of tariff because their stocks were down and luxury good prices are up… But US lost 90% of manufacture jobs these years due to the unbalanced trade. So the reciprocal tariff has two purposes, one, to force other country to drop their tariff of American goods, two, to bring invests back to US so that manufacture jobs can be brought back to the blue collar working class in US, who don’t own stocks or luxury goods. Here please don’t insult MAGA, a largely blue collar working class people, just because you can afford Hermes or Chanel bags.
Only about 3% of US blue-collar workers are employed in manufacturing so the rest of us will be paying the massive tariff-induced price increases to “hopefully” protect those jobs and “possibly” create a few more. There is nothing inherently wrong with trade deficits! People need to wake up!
I’m sure everyone in the USA is super excited about working 12 hour shifts sewing t-shirts and assembling iPhones they will no longer be able to afford on their minimum wage salaries. 🤡 That’s not the kinds of jobs we should be looking to develop in what was the first economy in the world.
Of all the reasons I might (and do) have issues with MAGA, the inability of blue collar supporters to afford Hermes or Chanel bags doesn’t even come close to making the list.
Please don’t accuse PB readers of something they’re not even remotely guilty of.
The tariffs won’t bring manufacturing back to the US any more than they’ll bring steam trains or coal mining.
Also… MAGA is not largely blue collar and working class, that is a myth. Wealthy people want their tax cuts and they add willing to vote for just about anyone to get them.
I can’t afford the bags and never will be able to. I come here for the same reason I go to museums and art galleries: I like to look and admire. But if you expect Fendi factories to mushroom into being in the rust belt next year you are dreaming.
What is this Trump propaganda? Get your facts straight!
What a mess. From a purely selfish point of view, I am glad that this all took place after my March birthday. Otherwise, I would have been prudent and not done any celebratory shopping. No Saint Laurent bag, no Montblanc pen. I am going to enjoy them as much as possible because we are now avoiding any unnecessary purchases. 🙁
And I think that is the value in all of this. Reflecting on what we need and what we want. We all are entitled to treat ourselves to luxury goods but do we need them? This may in the future be a benefit to all of us when we consider buying outside of our needs again. Happy Belated!
Happy belated birthday! I had the similar thought – those “excessive” purchases I felt slightly guilty about all of a sudden felt like a good deal… alas!
UGH. I am sick of this.
This is why the world laughs at us. We are having a full blown disagreement about handbags 😭
it was a very well balanced article.
Celine Sa are texting clients telling them a major price increase is coming and to purchase merchandise quickly. Looks like a scare tactic to make impulse purchases. If LV add price increases to customers orders that are still waiting for merchandise from February and March for the Murakami collection this is just horrible.
I believe the same. The Queen of the EU already offered zero tariffs and negotiations are under way. Even if an agreement is reached this evening, it will still be used as an opportunity to raise prices this year. You can buy a bed a rest assured any CEO is at least pushing a 10% increase in prices to get that bonus. Its just business.
Lots of industries are canceling pre-orders or informing consumers that their pre-ordered products will be subject to price increases in lieu of this tariff war. It is safe to assume that LV Murakami pre-orders will also increase in price.
Well, just in time. I’m gifting this article to you all. https://www.nytimes.com/2025/04/09/style/tariffs-eu-luxury-fashion.html?unlocked_article_code=1.-U4.t2u6.bWeWkqr7BVeD&smid=url-share
Thanks for sharing this article. I read through it and, imo, it didn’t uncover anything that we didn’t already know.
Lots of uncertainty all around, and companies and consumers are running around like headless chickens. Humans thrive under stability and predictable outcomes… this environment offers anything but that.
True and true and mostly all true. I only offer one observation that makes this time around a bit more dire – the so called “wealth effect” fueled by recent years’ market performance has created the outsized customer base for the luxury market – and last week (and counting) brought a rude awakening. All of sudden many are not so flush anymore. This is sinking in. Yes the “wealth effect “ and its counter part are both in one’s head. And we can make the general case that they are transient as history has shown – not so fast though, this time is truly different as in the whole mess is by design and self inflicted. Market will right its own course but not when it’s suffering collateral damage from the external powers to be. The level of uncertainty is unseen and unparalleled. Purse strings will and should be held tight in these times. This is no longer about affordability. It is about outlook.
I’m considering liquidating my entire collection save for my daily use ride or die pieces. I think where things are going I will be happy to hang on to my home and hopefully still get to retire.
I am going to France in June and planning to buy some designer shoes, possibly a bag or two. Upon returning to California, does this current situation with tariffs work in my favor or against me? There is a $5000 free pass to come in to the United States with purchases from abroad.
I should probably educate myself on it, but it would certainly be quicker if someone could give me the Readers Digest version if purchasing abroad would be great or not so great for me! Thank you!
It’s $800 per passenger. If you bring back goods above $800, you need to declare it at US customs and pay tax. Of course, many passengers don’t declare their goods but it’s a risk you take if you get selected for customs search upon your return.
Exactly! Traveling thome from Paris, a few yes ago, I was the only one, in line, declaring my purchases over the $800 threshold. However, many other passengers were carrying Hermes and Chanel products and the odds they traveled with them I’m going to estimate at zero. However, the chance of customs taking my product, while also fining me was a strong deterrent from trying to bring goods into the Country without declaring them. Well, that and my morals and ethics prevented me from even thinking about it.
If someone plans to not declare… make sure you are not traveling with your receipts, VAT refund paperwork, and that your bank account doesn’t show the transactions. CBP can carry thorough investigations. And if you are pulled aside by CBP, come clean immediately. Lying to agents will only make things worse for you if you are caught.
Where have you heard that there is a $5,00 free pass to come int the US with purchases from overseas? I thought it was $800 per person and you could aggregate the amounts with family members traveling with you so for example when I travel with my husband and our two children, it is $3,200. And this available only once every six months. I’d love to be wrong because I am going to France alone in May. Hence, the question.
I think I got that number when we traveled as a family and they were five of us so I must’ve just rounded up. My apologies.
It is definitely NOT a $5000 free pass! You are correct that it is $800 per person and can be combined for the family. I just got back from France yesterday. I ended up paying about $16 tax when I declared my purchases for the family.