Trump’s Last-minute Tariff Changes Rattle Luxury Shares

Updated 7:47 p.m. GMT March 7

LONDON — U.S. President Donald Trump’s last-minute decision to roll back tariffs temporarily for Canada and Mexico sent European luxury shares down in the double digits in Friday trading.

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Of Europe’s luxury brands, Salvatore Ferragamo was the hardest hit, closing down nearly 16 percent to 6.32 euros, followed by Burberry, which was down 5.6 percent to 10.10 pounds.

Ferragamo’s sharp decline could also have been a result of the company’s struggles and the exit of chief executive officer Marco Gobbetti.

Richemont closed down 5.4 percent to 164.85 Swiss francs, while Kering fell nearly 4 percent to close at 249 euros. LVMH Moët Hennessy Louis Vuitton fared slightly better than its peers, ticking down 2.8 percent to 634.70 euros.

All companies that export goods to the U.S. — and not just Canada and Mexico — have been rocked by the lack of clarity around the new tariffs.

The next key date for Trump’s tariffs plan is April 2, when they are meant to be extended to other countries, including the European Union. Those tariffs could potentially sweep up luxury goods in some form.

It means they are unable to plan for the long-term, and potentially face hours at the border dealing with red tape due to the last-minute changes.

In a report on Friday, HSBC said that volatility, uncertainty, complexity and ambiguity, or VUCA, “is an accurate summary of what’s coming out in terms of geopolitical, economic and market news flow from the U.S. these days.

“The many fits and starts on tariffs, unexpected changes in the U.S. relationship with Ukraine, Russia, NATO and more, have had many consequences that will directly affect demand for luxury,” the bank added.

Over the past few days, Trump has backtracked on tariffs with the closest neighbors in the U.S., Canada and Mexico.

On Thursday night, he gave a one-month reprieve to Mexico, lifting the previously announced 25 percent import tax. Earlier in the week, he also changed his mind about car imports from both countries, and froze those taxes for one month.

John Harmon, managing director of technology at Coresight Research, suggested that retailers should take the long view, and remain flexible.

“Retailers that focus on long-term strategies to keep prices from going up will grow their share of the market during these uncertain times, whether it be during heightened inflation or not. Having a diverse sourcing base will reduce reliance on any single market, ensuring quick fixes in the supply chain for retailers,” he said.

“Alongside this, retailers should consider strengthening technological infrastructure to increase operational efficiency and profitability to absorb additional costs. Tools, such as AI, can improve demand forecasting, inventory allocation and more, preventing excess inventory or stockouts,” he added.

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