What are luxury brands doing in the face of trade tariffs?

Many high-end brands have also accelerated domestic production capabilities in the last few years. Whether these were in direct relation to imposed tariffs is unknown. 

For instance, LVMH has increased its European production capabilities, particularly for Louis Vuitton leather goods. Two new ateliers have opened in France in 2022 and increased hiring has been widely reported. Similarly, Richemont, Van Cleef & Arpels’ parent company, has been investing in expanding its French manufacturing footprint for the jewellery brand, including plans to open two new workshops in France by 2026. This will create approximately 600 new jobs.

In April 2023, Hermès opened a new leather workshop, Maroquinerie de Louviers, in Normandy. Since 2010, Hermès has opened 11 leather goods workshops in France.

Read more: The Arnault effect: how LVMH defines global luxury, indulgence and desire

The trade tensions have sparked an unexpected cultural phenomenon that further complicates the luxury industry’s narrative. In April 2025, Chinese manufacturers began flooding TikTok with viral videos claiming to expose the truth behind luxury goods manufacturing; factory owners present themselves as the original equipment manufacturers for major luxury brands while standing in front of walls of what appear to be expensive handbags.

These “Trade War TikTok” videos feature sales agents breaking down the material costs of luxury goods, claiming items like Hermès Birkin bags and Lululemon leggings cost just a fraction of their retail prices to produce. However, experts labelled many of these claims as false, noting that the videos represent a form of mass consumer disinformation rather than factual exposés; a well-oiled machine to sell high-quality counterfeit goods. 

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Perhaps the most intriguing development has been the acceleration of material innovation and diversification. Faced with unpredictable costs for traditional luxury materials, brands have invested in alternatives.

Since its launch in 2001, Stella McCartney has been committed to using sustainable materials in its products, refusing to use leather, fur, skins, feathers or animal glues. It continues to lead in this area, with garments made from planet-friendly alternatives such as grape-based leather substitutes in partnership with Veuve Clicquot. The vegan leather is manufactured from 80 per cent recycled materials.

Chanel has increased its use of French-produced tweeds and Italian silks. In April 2025, after 50 years of working together with Italian silk manufacturer Mantero Setamarketing in Como, Italy, it acquired a 35 per cent stake in the company. Chanel president of fashion Bruno Pavlovsky said before the brand’s Cruise 2025-26 show, “I always say that Chanel is half French and half Italian.”

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While Western and European brands adapt, Asian manufacturing hubs have proven remarkably resilient. China’s luxury goods production has evolved beyond simple contract manufacturing toward full-service partnerships that include design, materials sourcing and even marketing support.

Vietnam has emerged as a particular beneficiary, with leather footwear production increasing by 31.8 per cent since 2025. Bangladesh, traditionally associated with fast fashion, has made surprising inroads into luxury accessories. It is actively promoting its leather, footwear, and leather goods sector internationally and is recognised as a competitive sourcing destination for global buyers.

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These countries have also strengthened regional trade relationships, creating alternative supply networks that reduce dependence on any single market. The Regional Comprehensive Economic Partnership (RCEP) has facilitated smoother trade flows within Asia, allowing manufacturers to source materials regionally and maintain competitive pricing despite external tariff pressures.

Asian luxury brands themselves have turned trade tensions into competitive advantages. Chinese brands like Shang Xia (backed by Hermès) and Qeelin have emphasised their domestic heritage, appealing to both local pride and international curiosity about authentic Asian luxury.

Japanese brands have been particularly strategic, leveraging their reputation for quality while maintaining manufacturing flexibility. Issey Miyake has expanded production capabilities in both Japan and selected Southeast Asian facilities, allowing the brand to serve different markets through optimal supply chain configurations.

Read more: Chinese designer Yang Li is Shang Xia’s new fashion director

For discerning buyers, understanding these industry shifts presents clear opportunities to maximise purchasing power while building more strategic collections. The most sophisticated consumers are already adjusting their approach to luxury acquisition.

Savvy buyers are monitoring production cycles and tariff announcements to optimise purchase timing. Items manufactured before tariff implementations often remain at lower price points until inventory clears. Heritage pieces are also smart pieces to invest in. These items produced in the brands’ traditional manufacturing bases are less susceptible to tariff-related price volatility. These pieces also tend to hold value better over time, making them superior long-term investments.

As new luxury goods face pricing pressure from tariffs, pre-owned alternatives become comparatively more attractive, often offering items from periods when manufacturing costs were lower.

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The long-term implications extend far beyond individual brand strategies. We’re witnessing the emergence of a truly multipolar fashion industry, where production decisions are driven by sophisticated calculations that balance quality, cost, cultural authenticity and political stability.

Smart luxury brands are treating this complexity as an opportunity rather than a burden. They’re building supply chains that are not just efficient but also resilient, creative and aligned with evolving consumer values around transparency and sustainability.

For investors and industry observers, the message is clear: the brands that will thrive in this new environment are those that view trade tensions not as obstacles to overcome, but as catalysts for innovation and differentiation. In an industry built on exclusivity and craftsmanship, the ability to tell compelling stories about provenance and production has become as valuable as the products themselves.

The tariff era has fundamentally altered fashion’s global calculus, but the industry’s response suggests that adaptability remains its greatest luxury.

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