By Maura Carlin, Editor
Tariffs, tariffs, and more tariffs. The hits keep coming for the already beleaguered luxury fashion industry. Earlier this year, U.S. President Trump imposed an additional 10% tariff on EU imports, which include many of American fashionistas’ favorite brands –Hermès, Chanel, and Louis Vuitton. Another 10% levy was expected to take effect this year, making the combined additional tariff 20%. Now, however, Trump has upped the ante: that as of August 1, 2025, the tariff on EU imports to the United States will be 30% (or 20% higher than now).
Image courtesy: @irinao
Thus far, most of the luxury houses have not passed the additional tariff costs on to U.S. purchasers. With one big exception – Hermès. As “promised” by CEO Axel Dumas when the tariffs were not yet a reality, Hermès planned to have the American consumer eat the extra cost. As a result, in May 2025, prices on most Hermès products in the US rose approximately 5-6%.
Read:
New Hermès Prices Post Tariff Increase May 2025
Hermès Price Increase – Tariff Will Be Passed On to US Consumers and Q1 2025 Results
Image courtesy: @darjabarannik
But what happens if there’s another 20% hike in tariffs on Hermès handbags? Will Hermès shift the burden to US purchasers? If so, while it is unlikely that US prices will rise 20%, they could rise 10-12%, based on the prior calculations for a 10% hike. In practical terms, the Birkin 25 in Togo leather, now $12,100, could see a price tag roughly between $13,310 and $13,552. That is, if Hermès decides to pass on these new additional tariffs to consumers, as it did in May 2025.
Should Hermès further increase US prices, the difference between buying in the US and abroad becomes stark. Currently, the B25 EU price is €8950. At today’s exchange rate, that is equivalent to $10,395, or about $3,000 less than the estimated US price if Hermès shifts the “extra” tariff burden to US consumers.
It is unlikely that yet another price hike to cover tariffs will prevent anyone from claiming their quota bag offers. However, clients could be deterred from purchasing other Hermès leather products, such as the already costly ready-to-wear designs, as well as other items that help develop a relationship with the brand and the Sales Associates.
Image courtesy: @melissasoldera
And then the question is, what will Chanel and Louis Vuitton do? These additional costs will undoubtedly affect their bottom lines, whether by cutting into revenues and profits, or by further depressing sales if they increase US prices now. Chanel’s 2024 financials showed already declining revenues, and the cost of its hallmark 11.12 Classic Flap has not increased since March 2024. LVMH, owner of Louis Vuitton and many other luxury labels, will report its half-year 2025 results next week, and analysts are expecting less-than-stellar results. Its Q1 2025 results showed a 2% year-over-year decline in revenues, with a 4% drop in fashion and leather goods. Perhaps not surprisingly, the LVMH stock price has been in a slump in 2025, declining about 25% in the first six months.
Image courtesy: @lucky_girl_h
There is one not-so-little caveat to President Trump’s latest tariff announcement on social media: that “there will be no Tariff if The European Union, or companies within the EU, decide to build or manufacture product within the United States.” For Louis Vuitton, that may be an option, as it already manufactures handbags in California and Texas. Indeed, it opened a Texas facility to great fanfare attended by the U.S. President during the first Trump term. LVMH CEO Bernard Arnaud is a long-time friend of Trump and has indicated a willingness to work with him.
Image courtesy: @elle_ferguson
On the other hand, don’t expect Hermès to start producing Birkins and Kelly bags stateside. It has previously indicated it will not, pointing to its French heritage and commitment to developing and continuing French craftsmanship.
How will you handle a handbag price increase due to tariffs? Will you be in or out of the luxury market?
Love, PurseBop
XO
Updated: July 18th, 2025
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