The uncertainty caused US duties isn’t over. Is the 15% agreed upon between the US and EU an additional duty or not? And are luxury brands able to raise prices again to offset duties? Weak consumer demand tests their purchasing power. Here the latest studies and scenarios put forward by analysts tell of the price challenge faced by brands.
The assumptions
UBS estimates that a 15% duty on exports to the U.S. could be offset by an average sales price increase of 2% by luxury brands, or a 1% increase globally if they want to maintain a balance in price harmonization across regions. In the case of no price increase, their earnings would be impacted by about 3%. What will the brands do in a period of slowing consumption, bearing in mind that wealthy customers are resisting increases and many luxury products are already unaffordable for aspirational consumers?
The price challenge
It’s no coincidence that prices have risen less in this 2025 compared to the past. According to UBS, the price of luxury goods increased by an average of 3% between January and May 2025. This is significantly lower than the 8% peak in 2022. With the Financial Times, Claudia D’Arpizio of Bain calls this caution in increases a “clear shift in strategy”. She adds, “a more measured approach to pricing represents an effort to defend volumes while building resilience against imminent risks, such as possible tariffs”. In turn, Jacques Roizen, CEO of Digital Luxury Group for China, told Reuters, “Brands are proceeding carefully with further price increases, to avoid alienating younger, casual shoppers”.
Limited room for maneuver
Some high-end brands say they may be able to raise prices to offset duties, but analysts and industry professionals warn that some have very limited room for maneuver after past increases. In sum, those who have already practiced increases today have less opportunity than those who had been more cautious. “The brands that got the price balance wrong are the ones struggling the most today”, argues Flavio Cereda of Gam Luxury Brands.
The knots on tariffs
Despite the agreement between the US and EU, uncertainty is far from disappeared. In fact, it’s still uncertain whether the 15% duty is additional to existing duties or not. EU President Ursula von der Leyen said the 15% is not additional, according to a CNBC report. This would be big news for European footwear brands, if confirmed by Trump. According to Paulo Goncalves, communications manager of Apiccaps, the Portuguese association of footwear, components and leather goods manufacturers, the average duty for Portuguese shoes to the U.S. in 2024 was 10%. So if the increase is only 5 points, “the agreement can be considered positive for the sector”, writes Footwear News.
Photo from Chanel
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