Next round of Trump tariffs may hit Europe’s luxury-goods exporters
September 16, 2019
Some of Europe’s top luxury brands are targeted in President Donald Trump’s latest tariff salvo, which could affect billions of dollars in exports of American-bound whiskeys, wine, Champagne, handbags and men’s suits.
A panel of three World Trade Organization arbiters, as expected, said Friday the U.S. can legally impose tariffs on an array of European exports in retaliation for Europe’s illegal government aid to Airbus SE. EU sources say they expect the WTO arbiters to publicly circulate a report by month’s end, that will allow new U.S. duties on a range of goods worth $5 billion to $7 billion per year, while Trump has threatened tariffs on $11 billion.
Shares of French luxury conglomerate LVMH fell as much as 4.4% on Monday in Paris, with Airbus dropping as much as 5.4%. Continuing political turmoil in Hong Kong and a slowing Chinese economy have also weighed on European fashion and drinks companies.
Washington’s response is expected within days after the WTO’s green light for retaliation. The U.S. has identified possible targets - with tariffs potentially as high as 100% - on a list of goods with a total export value of $25 billion a year. Though the most valuable goods on the U.S. list are exports of European aircraft and parts, the tariffs could also hit products made by Europe’s most recognized high-end brands.
LVMH is particularly vulnerable to the proposed U.S. levies, which target two of its primary product lines - wine and spirits like Dom Perignon, Moet & Chandon and Hennessy—and leather goods under labels such as Donna Karan, Givenchy, Kenzo, and Louis Vuitton.
The U.S. market for luxury goods is among the top destinations for European companies like LVMH where the U.S. made up almost a quarter of its total global sales last year. American shoppers bought 11.2 billion euros ($12.4 billion) worth of goods from LVMH in 2018, according to Bloomberg data.
To read more, select this link.
Source: American Journal of Transportation (AJOT)
Questions? Please contact your Farrow representative or complete our online form.