Of Andrea Felsted*

Not even the French tycoon, Bernard Arno, could save European luxury from Donald Trump’s duties.

The US president introduced increased contributions to European and Swiss products on Wednesday, a decision that is expected to harm Louis Vuitton and Rolex watches were likely to raise their price even more for US buyers.

But for the wider fashion and retail industry, the most damaging element of “Day of Liberation” will be the large duties imposed on Vietnam, Bangladesh, Cambodia and Indonesia, where many clothing, furniture and footwear companies have shifted them. This will hurt a wide range of consumers as companies on both sides of the Atlantic fight with the impact.

Although LVMH’s president and chief executive attended Trump’s swearing -in last January, this did not prevent the US president from imposing 20% ​​duties on imports from the European Union and 31% from Switzerland.

Luxury companies, however, are much better than all other retailers, because initially, they have much higher profits, giving them a larger pillow to absorb higher costs and also target richer customers, who are more capable of absorbing prices. LVMH is a leader in America as bags and leather species are made in Texas and California. However, the great know -how in fashion and leather species remains in Europe: it is difficult to see a Hermes Birkin bag carrying “Made in America”. But even the giants in the industry will not have enough time, so they will transfer inflation to customers. They have already dramatically raised prices over the last five years, alienating many buyers. The average price of flagship products has increased by 54% since 2019, according to HSBC Holdings Plc analysts.

Even so, the state of the gangeria seems to be manageable compared to salespeople for clothing and sports markets, who will soon feel the impact of higher duties on Asian countries.

The initial increase of 10% of Trump on Chinese duties in February was much smaller than expected. The contribution has now increased, with an additional 10% imposed in March and Wednesday with another 34%, bringing China closer to 60% threatened by the president last year.

But the biggest problem is sure to be the duties imposed on other construction countries, including 46% in Vietnam, 49% in Cambodia and 37% in Bangladesh.

As companies have reduced their dependence on China, due to the increasing cost of production and the vulnerabilities in the supply chain, they have moved to other nations, especially to Vietnam. Since 2010, the percentage of clothing imports in the US from China has been almost half down to 21%, while the percentage from Vietnam has more than doubled to 19%, according to Bank of America Corp. analysts.

The production of footwear depends significantly on the Vietnam. Vietnam accounts for 50% of Nike’s footwear, compared to 37% in 2010, according to Bernstein analysts. Adidas supplies 39% of its shoes from the country, Bernstein says. But they are not the only companies. Vietnam represents 40% of Lululemon Athletica Inc. products, according to Bernstein, while Bloomberg Intelligence analyst Mary Ross Gilbert points out that the country represents a significant part of the supply chain for other companies such as Abercrombie & Fitch, Gap and Gap and Victoria’a Secret.

Retailers may have some emergency levers to pull. Asking suppliers to bear part of the weight will be the first port. But these efforts have so far been treated with a mixed response. Last month, Chinese authorities called Walmart Inc. executives. Following reports that they had asked the suppliers to bear the cost. Local coins may also bend under the new trade regime. Although factories are paid in dollars, costing in local currency. Companies can also rebuild products to make them cheaper – think of pockets without pocket for your phone – but this will take some time and probably won’t make a big difference.

The sweeping nature of Trump’s trade war means that it will be impossible to offset all this suffering. Retail traders should either hit their profits or pass their costs to customers. The latter will not be easy. Consumer confidence in the US has already been cracked and price increases in a wide range of goods will further squeeze their consumer power. Most companies have not explained the impact of invoices so far. Since the pressure has intensified, now they have to do so – fast.

There may still be room for negotiation with the Trump government for exceptions. Luxury companies seem to have a better place here, with Arno on her side. But it is a more gloomy picture for the rest of the retail trade. Perhaps Gary Friedman, Managing Director of the Retail Furniture Company Restoration Hardware Holdings, better sums up the bursts of the industry just with a … “” Oh “

* Andrea Felsted is a columnist for the Bloomberg Opinion that covers consumer goods and the retail industry. Previously, he was a Financial Times journalist