Luxury brands were already on the ropes — tariffs add to pain

What you probably already know: Clothing brands are bracing for the impact of tariffs and consumers are increasingly concerned that once-affordable brands might quickly become unaffordable. For luxury brands, though, the tariffs mean more than just higher prices for clothes. In an economic downturn, consumers frequently turn to more conservative, understated clothing, leaving the luxury brands in the closet, according to the Wall Street Journal. When everyone is struggling to pay their mortgage, it can seem ostentatious to carry around that Hermes Birkin bag..

Why? Luxury brands were counting on a bit of a bump from the Trump administration, as the president and his family are quick to flaunt their wealth and set a tone that makes luxury products more appealing. Now, though, as the economy quickly moves into recession territory, designers are watching that opportunity disappear. Shares of Burberry, LVMH and Hermes have all fallen significantly since early March.

What it means: Luxury brands had been boosting revenue through increased prices, but now those decisions are catching up with them. Demand has weakened for their products, which resulted in 13 luxury brands changing out their creative leadership in recent months. LVMH just named new CEOs of both Fendi and Kenzo. About 50 million customers stopped buying in the past two years as the cost of household goods rose and middle-class shoppers could no longer afford these splurges.

What happens now? Expect to see some of these brands try some new ways to attract younger people and other demographics. Prada brand Miu Miu boosted sales by more than 90% in 2024 by doing just that, and Louis Vuitton took some creative risks that paid off big time when its collaboration with Japanese artist Takashi Murakami sold out almost immediately. If you’re looking for brands that tend to do well in a recession, look no further than TJX Companies, the parent of T.J. Maxx and HomeGoods, and Ross Stores. When the rest of the market falls, these brands tend to soar.