By Isabella Popo and Bella Stryker
So we’ve all heard the news– tariffs are here. They will affect the pricing of all things not manufactured in the U.S.– so pretty much everything from the cost of our iPhones to chocolate to watches. Your political opinion on the subject aside, the tariffs will affect all of our summer shopping.
Why is this happening, you may ask? The Trump Administration, which is operating under an “American First” agenda, wants to bring manufacturing back to the U.S. To incentivize companies to shift production stateside, President Trump has imposed heavy tariffs on imports (products being sent to the U.S. from other countries). By raising the cost of doing business abroad, he hopes to make domestic manufacturing more appealing. However, during this market adjustment period, we’re going to have to budget our money correctly.
A tariff is “a tax on imported goods” according to SMU Economic Professor Mea Alhberg. However, it’s not foreign countries who pay that tax– it’s the American companies who are importing the goods.
Companies have two choices when it comes to tariffs: absorb the added costs themselves or pass them onto consumers. Most will likely choose the latter, meaning prices on everything from cars and groceries to clothing are expected to rise. Whether you’re shopping at H&M or Hermes, clothes and accessories purchased in America are about to get a lot more expensive.
Kent Smetters, professor of business economics and public policy at the Wharton School of Business at the University of Pennsylvania, told “Glamour” that on average, we can expect to pay 35% more for clothing and 20% more for beauty and skin care products. That’s because even when clothing or beauty products are made in the U.S., the materials and textiles are often imported. So, tariffs on these imported materials still drive up production costs—and eventually, retail prices.
A prime example of this is LVMH. The house built two Louis Vuitton facilities in California (in 2011) and one in Texas (in 2019) to help boost U.S. production. However, this move doesn’t eliminate all costs, since raw materials—like leather, hardware, and specialty fabrics—are still largely sourced from Europe and other international suppliers. As a result, even luxury brands with U.S. production facilities are still vulnerable to rising costs, which is already starting to impact the prices of high-end goods.
With that being said, here are a few examples of some SMU staple pieces that are expected to rise in cost.
The infamous SMU tote bag: Goyard. Though they don’t allow you to purchase their purses online, word on the street is that the Anjou GM is currently retailing for around $2,500. Goyard purses are primarily made from Goyardine canvas, a coated fabric of linen and cotton. The blend of these two fabrics create a waterproof material, which is unique to Goyard– it’s what allowed them to rise to fame in the first place. The French brand only manufactures in France, so it is subject to the general European Union tariff (20%). $2,500 × 0.20, the bag will most likely cost around $3,000 if the consumer absorbs the full price of the tariff as anticipated. This is a bag you are definitely going to want to buy during your euro summer travels!
Golden goose sneakers, another SMU classic, will also increase in price. Handmade in Italy, the company utilizes a vertical supply chain to source their materials. Golden goose controls its production process–from raw materials to the finished product–which means they don’t rely on external suppliers or contractors to create their shoes. As a European country, Italy is subjected to a 20% tariff. A typical golden goose superstar retails for $595 at the moment. Add the 20% tariff onto it, and you can expect to be paying north of $715 per sneaker pair if Golden Goose passes the cost of the tariff onto its consumers.
And last but not least, because it’s quite literally the most expensive brand, Hermès. Their classic Clic H bracelet, originally $740, will cost a whopping $900 after the EU tariff.
“The company is almost 190 years old; we’ve experienced tariffs before,” said Hermès luxury group’s manager Axel Dumas. “If tariffs increase, we will raise our prices to compensate,” he said.
Now mind you, these bracelets are made with only a thin layer of gold called yellow-plated gold. For further insight, SMU Look staff member Mythili Reddibathini wrote an article on the jewelry durability. In it Reddibathini mentions that gold-plated items are much less resistant to rust than solid gold, which makes the price of the Clic H seem borderline outrageous. (Nonetheless we are sure it will still be spotted in every #SMUrush tik tok in the fall).
The increase of these items costs will be painful to watch. However, Vogue’s Business of Fashion journal notes that “the immediate impact won’t be as dramatic for luxury, which operates at a higher gross margin than other categories, allowing it to more easily pass costs on to shoppers.” In other words, luxury brands have a bigger profit cushion built into each item they sell, which makes it easier for them to absorb higher costs, like tariffs, without significantly hurting their bottom line.
Nonetheless, if you are looking to purchase, try to buy these high-end items abroad!
