D-Day arrived on August 7 for new US tariffs, which increased by 10 to 55% on many imports from around 60 countries. The luxury sector is concerned about the new situation.
There was no miracle.
As expected, at 12:01 a.m. Washington time (4:01 a.m. GMT) on Thursday, August 7, new US tariffs ranging from 10% to 55% came into effect on a significant number of imports from 69 countries. They replace the 10% tariffs already imposed in April on the vast majority of products from these countries.
“It’s midnight!!! Billions of dollars in tariffs are now pouring into the United States of America,” Donald Trump, who signed the executive order on these surcharges on August 1, rejoiced on his Truth Social network.
Concerns
But while the US president is rubbing his hands with glee, this is clearly not the case for his trading partners and sectors such as the luxury goods industry, for which the United States is a major market.
While many economists expect these measures to weigh on inflation in the US, which already rose to 2.6% in June, and on growth, which is likely to slow to a maximum of 1% on an annualized basis in the second half of the year.
While many uncertainties continue to hang over certain sectors, such as wine and spirits, one thing is certain. The United States has traded a liberal, free-trade economy for a protectionist model. Customs duties on its imports of goods have risen from an average of 2% at the beginning of the year to 17.3% today, according to calculations by Yale University.
The majority of the 69 countries targeted by Donald Trump’s decree, including those in the European Union (EU), will have to pay 15% tariffs on many products.
Hefty bills
But others will have to pay much higher bills for a varying percentage of their exports. Most Southeast Asian countries will pay between 19% and 20% in customs duties; China, South Africa, Algeria, Bosnia-Herzegovina, and Libya will pay 30%, while Canada, Iraq, and Serbia will pay 35%….A neighbor of the United States, Mexico, is holding its breath: Donald Trump has extended the 25% tariff on products entering the United States outside the North American Free Trade Agreement for 90 days.
In Canada, Prime Minister Mark Carney has calculated that more than 85% of Canadian exports to the US are excluded from the scope of the tariffs.
But for some countries, notably Brazil and India, the prohibitive rate imposed (50%) has a punitive geopolitical background.
Brazil and India hit hard
Brazil is paying for its prosecution of Donald Trump’s former ally, Jair Bolsonaro, who attempted a coup after losing the 2022 presidential election to Lula.
And on August 5, the US president announced that he was doubling tariffs on products imported from India from 25% to 50%. This is a clear warning to a country that provides economic support to belligerent Russia and which, according to Donald Trump, “not only buys huge amounts of Russian oil” but also “resells much of it on the market for huge profits.”
The absence of Russia, Belarus, North Korea, and Cuba from the list of countries affected by the new taxes is surprising. However, last April, the White House had already made it clear that these countries were subject to “sanctions excluding all significant trade.”
Only seven preliminary agreements
While the US government had announced that dozens of agreements would be signed before the new taxes came into force, only seven preliminary agreements, yet to be formalized, were finally concluded, notably with the European Union, the United Kingdom, South Korea, Japan, and Vietnam, in exchange for promises of massive investments in the United States.
Some countries tried to negotiate until the last minute. This was the case with Switzerland, which sent its president, Karin Keller-Sutter, and its economy minister, Guy Parmelin, to Washington. Their efforts were in vain, as Donald Trump finally decided to impose a severe 39% tariff on Swiss imports, with a further increase likely to follow on pharmaceutical products.
This decision is likely to have a serious impact on the Swiss economy, with 18.6% of its exports going to the US. In addition to pharmaceutical products, these include industrial machinery, gourmet specialties such as cheese and chocolate, and watches.
In 2024, the US was the leading export market for Swiss timepieces, accounting for 4.3 billion Swiss francs, or 17% of total exports, far ahead of China (8%).
Uncertainty for wines and spirits
The agreement reached at the end of July between Donald Trump and Ursula von der Leyen, President of the European Commission, made it possible to “limit” customs duties on EU imports to 15% instead of the 30% that had been threatened. In exchange, the US President secured a commitment from the Europeans to invest $600 billion in the United States, purchase US military equipment and $750 billion worth of US energy, particularly liquefied natural gas (LNG).
Most of its exports to the US, including today’s automotive and pharmaceutical industries, are affected, although uncertainties remain for certain sectors, such as wines and spirits, which could still be subject to a separate agreement.
Last April, the US president had already decided to impose a 10% tariff on most European products, as well as a 50% tariff on steel and aluminum, and a 25% surcharge on cars and car parts in addition to the existing 2.5% tariff.
With the tax now reduced to 15%, European cars and car parts are the only ones to benefit from a softening of the blow.
Coinciding with the luxury goods results season, there have already been numerous reactions to the new situation.
Luxury players impacted
In the high-end automotive sector, Germany’s Mercedes anticipates 2025 sales to be significantly lower than last year. It has revised its operating margin downward, as has Porsche, which now anticipates a margin of only 5 to 7%, compared to 10 to 12% at the beginning of the year.
Nicolas Hieronimus, CEO of L’Oréal, has announced that he intends to fight alongside other European beauty and personal care companies to lobby European leaders and negotiators to better protect their industry.
While admitting that such an increase in customs duties in the United States, the “leading contributor” to the group’s growth in the first half of 2025, would be “manageable,” the world’s leading beauty company nevertheless acknowledged that the impact on sales growth would be 0.35 to 0.40% in 2025.
To cope with this, L’Oréal has not ruled out transferring more production to the United States, where it already has four factories, or slightly increasing prices.
A fourth Louis Vuitton workshop across the Atlantic
For his part, Bernard Arnault, CEO of LVMH and a close ally of Donald Trump, whom he attended the inauguration of, told Le Figaro at the end of July that a new workshop for his flagship brand, Louis Vuitton, would be inaugurated in the United States in late 2026 or early 2027, adding to the three already in existence.
However, this scenario was ruled out by his rival, François-Henri Pinault, CEO of Kering, who said last May that “it would not make sense to manufacture Gucci bags in Texas.”
LVMH also indicated that it could offset a 15% rate by raising its prices.
Wines and spirits very concerned
However, the luxury goods leader also admitted that it would be “more complicated” for the Wines and Spirits division, as it is not in a position to raise prices. Cognac, certain wines and champagne cannot be produced in the United States.
The European wine and spirits industry, particularly in France and Italy, remains particularly concerned about this issue, as an increase in customs duties would be exacerbated by the decline of the US dollar, making the price of their bottles even more prohibitive. Gabriel Picard, president of the Federation of French Wine and Spirits Exporters, has warned that this double penalty could result in “a loss of one billion euros” for French producers.
Read also > Reciprocal customs duties: the United States and the European Union agree on a rate of 15%
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