What: Luxury retailers face strategic pricing decisions as EU-US trade agreement introduces 15% tariff, with different impacts expected across true luxury and aspirational consumer segments.

Why it is important: The divergent impact on consumer segments highlights a critical moment for luxury retail strategy, where brands must balance maintaining exclusivity with market accessibility, while the resale sector emerges as a significant beneficiary of changing consumer behaviour.

The recent US-EU trade agreement establishing a 15% tariff on European imports presents a complex challenge for luxury retailers, particularly affecting their pricing strategies and market positioning. While this rate is more favorable than the initially threatened 30%, it still requires careful navigation by luxury brands. Hermès has already implemented a global price increase of 7% with an additional 5% specifically in the US market, setting a precedent for the industry. Financial analysts predict minimal impact on true luxury consumers, with price increases expected in the low single-digit range. However, the situation poses a more significant challenge for aspirational luxury shoppers, who are increasingly price-sensitive across product categories. This bifurcation in consumer response is likely to accelerate existing market trends, particularly benefiting luxury resale platforms like Vestiaire Collective and The RealReal. The tariff's implementation forces luxury brands to balance maintaining profit margins with market accessibility, while potentially reshaping traditional luxury retail dynamics.

IADS Notes: The implementation of EU tariffs comes at a critical juncture in luxury retail transformation. As reported in April 2025, BCG projects $640 billion in additional US import costs from tariffs, while European suppliers controlling 70% of global luxury production face unprecedented pressure. This aligns with the article's analysis of brands like Hermès passing on costs to consumers. The impact on consumer behaviour is significant, with June 2025 data showing declining spending intentions among wealthy consumers, particularly affecting aspirational shoppers. The resale sector emerges as a key beneficiary, with March 2025 projections indicating the global secondhand market could reach $350 billion by 2028, supported by The RealReal's 444% stock surge in January 2025. Luxury brands are responding differently to these pressures, as evidenced by December 2024 reports showing some introducing sub-$500 products while others maintain premium positioning. This bifurcation in strategy reflects the broader market transformation, where traditional retail models face disruption from both tariff pressures and evolving consumer preferences.

How new EU tariffs could shift luxury pricing – and fuel the rise of resale