Nationalist narratives and protectionist policies are affecting the luxury sector, hindering its global growth, analysts warn.
The rise of nationalist narratives worldwide, including in China, is impacting luxury brands, according to analysts from Bernstein. In a recent report, experts Luca Solca and Maria Meita highlighted that protectionist policies in the U.S. are weakening growth prospects for global brands. Solca pointed out that “recent political decisions in the U.S. are reducing hopes that the cyclical demand environment has improved.”
One of the most critical issues is customs tariffs. Solca explained that “if tariffs remain between 20 and 25 percent, they could hinder economic recovery in China and weaken demand from U.S. consumers.” This scenario would worsen if higher rates were applied, such as the 200% increase Trump proposed for spirits.
However, some analysts remain optimistic. According to a report from Compagnie Financière Richemont, luxury could maintain its strength even with a weakening in China. In this context, Bernstein highlights that LVMH is well-positioned thanks to initiatives such as “revitalising Dior” and strengthening its wine and spirits division. Undoubtedly, the situation is complex, but brands will need to adapt to this new geopolitical landscape.
