With high profits and a reliable base of wealthy clients, LVMH (LVMHF) and Hermes—the world’s two largest luxury houses—are typically more insulated from economic turbulence than other retailers. Still, even top-tier fashion houses aren’t entirely immune to the effects of tariffs imposed by the Trump administration, which are already triggering production shifts and higher prices for U.S. consumers.
For now, both companies say their American sales remain largely unaffected by the new tariffs. However, LVMH this week reported weaker-than-expected revenue for the first quarter, citing a challenging global economic landscape. The group’s sales between January and March totaled 20.3 billion euros ($23 billion), a 3 percent year-over-year decline, with organic sales down in all regions except Europe.
While noting that tariffs haven’t yet forced major changes, the luxury conglomerate—which owns brands like Louis Vuitton, Dior (CHDRY) and Tiffany & Co.—acknowledged that U.S. levies could disrupt its manufacturing model. The company currently operates three Louis Vuitton production sites in the U.S., which account for roughly one-third of the brand’s American supply, said chief financial officer Cecile Cabanis on an April 14 analyst call.
In terms of boosting that supply in light of levies, “there is still capacity,” said Cabanis, who added that LMVH will examine “how much we want that to evolve.”
LVMH eyes a production shift to the U.S.
The Bernard Arnault-led company also manufactures most Tiffany & Co. products domestically and may shift more of that output from Europe if needed, Cabanis noted. “For both [Louis Vuitton and Tiffany], we can increase the capacity or production for the U.S.,” she said. “Still, it’s something that you don’t do overnight.”
Amid a broader slowdown in luxury spending, LVMH has lost more than 35 percent of its market value over the past year. Following its Q1 revenue miss, the company’s stock dropped more than 7 percent, allowing rival Hermes to briefly overtake it as the world’s most valuable luxury firm. LVMH reclaimed the top spot today, with a market cap of $275 billion, compared to Hermes’ $243 billion.
Hermes also disappointed investors with its first-quarter 2025 results. Revenue rose 7 percent year-over-year to 4.1 billion euros ($4.6 billion), but still fell short of analyst forecasts. Despite the dip, the company said it has not yet felt the effects of Trump’s tariffs.
Hermes to raise prices in the U.S. on May 1
Those levies, however, are about to bring tangible changes for Hermes’ American customers. In response to a 10 percent baseline tariff enacted by Trump on imports from all countries, Hermes will pass the added cost on to U.S. buyers, said chief financial officer Eric du Halgouët during today’s earnings call.
“The price increase that we’re going to implement will be just for the U.S. since it’s aimed at offsetting the increase in tariffs that only applies to the American market,” he told analysts.
The hikes will apply across Hermes’ product lines and are scheduled to take effect May 1. The company is “still calculating” how the increases will unfold, said du Halgouët. They’re expected to push prices of already-costly items such as the Birkin and Kelly bags—both starting start at $10,000—even higher.
For now, Hermes is adjusting for Trump’s 10 percent blanket tariff. But further proposed levies could hit within three months, significantly raising costs. Currently on a 90-day hold, Trump has floated tariffs as high as 20 percent on goods from the European Union and 31 percent on imports from Switzerland—both key sources of luxury exports.
