Trump's tariff threat: How European luxury brands are preparing

While Donald Trump had threatened to impose duties of 50 percent on European imports from June 1, the White House eventually decided to extend the tariff pause until July 9. This decision, reported by Reuters on May 26, 2025, reflects an unavoidable reality: trade between the US and the European Union is essential in both directions.

In 2024, the US accounted for 20.6 percent of EU exports, and its imports from Europe far exceeded its own exports to the continent.

Transatlantic trade is not a zero-sum game, but a driver of mutual prosperity.

However, the tariff threat still hangs over many sectors, including luxury goods, fashion, cosmetics and alcohol, which are heavily reliant on the American market.

Luxury and fashion: potential first victims

“We need to have rules,” Luc Lesénécal, president of French brand Saint-James, told AFP.

According to S&P Global, nearly a quarter of the turnover of major European luxury groups comes from the US. Some brands, such as Birkenstock, generate up to 46 percent of their sales there. When Trump's threats were announced, shares in LVMH, Hermès, Kering and Burberry fell by between 3 and 4 percent.

Creating a factory on American soil? “Impossible in the short term… there are neither the skills nor the human resources,” said Claudia D’Arpizio, a partner at Bain & Company. Only LVMH, via Louis Vuitton, produces partially in the US, but with operational difficulties.

French small and medium enterprises, also undermined

At Saint-James, a Normandy-based small and medium enterprise known worldwide for its Breton tops, 40 percent of its turnover is generated from exports, a third of which is in North America. The potential increase in duties to 16.5 percent would increase the price of a Breton top from 140 dollars to 155 dollars. In a sector where collections are prepared six months in advance, uncertainty weighs heavily. “Pass on the increases? Straight away or later? And what will the other brands do?” asked Manuela Horeau, export director.

EssilorLuxottica, at the forefront of trade threats

With 3,800 points of sale in the US (LensCrafters, Oakley, Sunglass Hut…) and 45 percent of its turnover generated in this market (nearly 12 billion euros), EssilorLuxottica is at the forefront. The group's dependence on Asian production increases its vulnerability. Some products from China are already taxed at 145 percent, and up to 20 percent from Europe.

According to BFM Bourse, the group anticipates “single-digit” price increases and is seeking to diversify its supply chains.

A potentially systemic shock

Beyond fashion, the spare parts, pharmaceuticals (120 billion euros of exports in 2024) and technology sectors are also under threat. The players exposed include Volkswagen, Safran, Bayer, Heineken, Novartis, Roche and Diageo.

“We know how to manage exchange rates or energy… But retroactive duties are very complex,” insisted Lesénécal.

An agreement within reach… but time is running out

President Emmanuel Macron said he is “confident” about the outcome of negotiations between Brussels and Washington. However, the window is short: discussions must be concluded before July 9. After this date, Trump could make good on his threats.

In the meantime, European companies are moving tentatively. “We work with our hands… The machines can’t do what we do,” concluded Viviane Rête from Saint-James. It is a call to protect the human behind the ‘Made in Europe’ label.