By Sabrina Escobar

Luxury stocks are sagging even though the European Union has struck a deal with President Donald Trump, reflecting disappointment that negotiators didn't carve out an exemption to tariffs for the sector.

European imports to the U.S. will now be subject to a 15% levy, both parties said on Sunday. That is higher than the 10% baseline tariff that had been applied to European imports since the spring, but is well below the 30% rate Trump threatened to impose earlier this summer.

The rate applies to most sectors, including cars, semiconductors, and pharmaceuticals, European Commission President Ursula von der Leyen said. But some "strategic products" will be exempt from tariffs altogether, including aircraft, certain chemicals and agricultural products, natural resources, and critical raw materials.

"We will keep working to add more products to this list," von der Leyen said.

It is yet unclear if those exemptions will eventually extend to luxury items. European makers of high-end alcoholic beverages have been lobbying to remove tariffs on their exports to the U.S., as have manufacturers of traditional luxury goods.

U.S.-listed shares of European luxury conglomerate LVMH Moët Hennessy Louis Vuitton were down 1.7% Monday morning. Shares of Kering and Pernod Ricard, both listed on the Paris stock exchange, were down 3.5% nearing the end of the trading day in Europe. Compagnie Financière Richemont dipped 0.8% in Switzerland, while Moncler and Salvatore Ferragamo both fell 1.8% in Milan.

Makers of luxury products may still be able to make the case for a sector-wide exclusion based on their collective economic importance for the bloc. A July study from the European Cultural and Creative Industries Alliance suggests that Europe's high-end and luxury sector represents about 5% of Europe's gross domestic product, and 11.5% of total European exports. A good chunk of that 11.5% goes to the U.S., which remains one of the biggest markets for luxury goods.

But absent any immediate clarity, both luxury-goods companies and investors will need to bank on the 15% for any products destined stateside. Although that is line with what many analysts were projecting, the increase still poses a problem for luxury brands.

Many said earlier this year that they would increase prices in response to the 10% tariff. A higher tariff rate could mean more increases, but as Barron's has noted, companies must be careful not to alienate consumers by raising prices too much.

Consumer demand is already shaky in the U.S. LVMH's U.S. sales dipped 1% from a year earlier in the first half of 2025.

Write to Sabrina Escobar at sabrina.escobar@barrons.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

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July 28, 2025 12:33 ET (16:33 GMT)

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