Global sales of personal luxury goods are projected to decline in 2025, marking the first contraction since the Great Recession, according to a Bain consultancy study. This downturn could worsen with tariffs promised by Donald Trump. Claudia D’Arpizio, a co-author of the study, expressed concerns that if implemented, these tariffs could pose significant challenges for luxury producers, especially European brands, which may become prohibitively expensive. Trump's proposed tariffs, up to 20% on imports, aim to boost factory jobs, reduce the federal deficit, and lower food prices.

Although the study did not specifically quantify the tariffs' effects on luxury goods, D’Arpizio highlighted that European luxury producers could face varied impacts based on the details of tariff implementation. Exemptions might be possible due to the lack of American luxury substitutes. Furthermore, the adverse effects might be mitigated by relocating production to the U.S. or through increased sales to American tourists in Europe. With the United States being the second-largest luxury market, after Europe, valued at around 100 billion euros, this region represents nearly one-third of global sales in high-end apparel, leather goods, and footwear.

The forecasted 2% dip in luxury sales to 363 billion euros in 2025, down from 369 billion euros in 2024, is attributed to significant price increases by brands coupled with global instability. Despite a swift recovery from the COVID-19 pandemic, with sales surpassing pre-pandemic levels by 2022 due to pent-up demand, the anticipated decline still leaves the market 28% higher than in 2019 and significantly larger than during the 2008 recession. Various factors, such as geopolitical unrest and major elections, have dented consumer confidence, D’Arpizio noted.

Concurrently, the tendency of luxury brands to raise prices while promoting less innovative "subtle luxury" has diminished the appeal even for affluent consumers. Additionally, the study suggests a creativity crisis, alienating Gen-Z shoppers, further contributing to the contraction of the luxury consumer base by an estimated 50 million, now ranging between 250 million to 360 million. "We have 50 million fewer customers because they either cannot afford luxury shopping or find it less appealing," D’Arpizio explained.