NEW YORK: Some of Europe’s top luxury brands are targeted in US President Donald Trump’s latest tariff salvo, which could affect billions of dollars in exports of American-bound beverages, handbags and men’s suits.
A panel of three World Trade Organisation arbiters, as expected, said on Friday the US can legally impose tariffs on an array of European exports in retaliation for Europe’s illegal government aid to Airbus, report agencies.EU sources say they expect the WTO arbiters to publicly circulate a report by the end of the month that will allow new US duties on a range of goods worth between $5 billion to $7bn (Dh18.3bn-Dh27.5bn) per year, while Mr Trump has threatened tariffs on $11bn of goods.
Washington’s response is expected within days of the WTO’s green light for retaliation. The US has identified possible targets – with tariffs potentially as high as 100 per cent – on a list of goods with a total export value of $25bn a year. Though the most valuable goods on the US list are exports of European aircraft and parts, the tariffs could also hit products made by Europe’s most recognised high-end brands.
LVMH group is particularly vulnerable to the proposed US levies, which target two of its primary product lines – beverage products such as Dom Perignon, Moet & Chandon and Hennessy, and leather goods under labels such as Donna Karan, Givenchy, Kenzo and Louis Vuitton.
The US market for luxury goods is among the top destinations for European companies such as LVMH, where the US made up almost a quarter of its total global sales last year. American shoppers bought €11.2bn ($45.6bn) worth of goods from LVMH in 2018, according to Bloomberg data.
LVMH chief financial officer Jean-Jacques Guiony said in July that the company is “sensitive to tariffs and trade barriers”.
New tariffs will increase the cost of goods and will undoubtedly be passed on to US consumers, said Luca Marotta, the chief financial officer of Remy Cointreau based out of Paris.“If the tariff increase will happen, I repeat myself, we will increase prices at the same moment,” Mr Marotta also said in July.