Tariffs and Trends: Challenges Loom Over Luxury Market's Future

A Bain study predicts a 2025 decline in global luxury sales, the first since the Great Recession. Potential tariffs by Donald Trump could impact European brands. Consumers are deterred by rising prices and lack of novelty, leading to a 50 million customer loss.

Global sales of personal luxury goods are projected to decline in 2025 for the first time since the Great Recession, according to a report by Bain. The potential decline could deepen if tariffs promised by former President Donald Trump are enforced, impacting European luxury brands.

Claudia D'Arpizio, who led the study for Italy's Altagamma association, described the scenario as a potential nightmare if implemented. Trump's tariff pledge of up to 20% on imports aims to boost factory jobs and address the federal deficit, though luxury goods may see exemptions due to limited American substitutes.

The study found the US is the second-largest luxury market after Europe. Despite a post-pandemic sales recovery, a 2% drop is anticipated next year as price hikes and global instability affect consumer confidence. The luxury customer base has diminished by 50 million due to unaffordable prices and a creativity crisis deterring Gen-Z buyers.

(With inputs from agencies.)