The luxury apparel industry in the UK is currently facing a looming threat of new US tariffs, as a result of the recent decision by the World Trade Organization. With the authorization for the United States to impose tariffs on approximately $7.5 billion worth of goods imported from the EU, British fashion brands are bracing themselves for the impact. The US Trade Representative has already released a list of affected products, which includes a wide range of items such as knitwear, suits, swimwear, and nightwear from the UK.
Moreover, the tariffs are not limited to just apparel products. They will also have repercussions on imports of single-malt Irish and Scotch whiskeys from the UK, as well as aircraft and luxury food and drink items from various European countries. This development follows a lengthy 15-year dispute over illegal subsidies provided to Airbus and Boeing by EU governments. The WTO ruled that these subsidies had caused harm to the US equivalent to $7.5 billion, prompting the authorization for tariffs.
The implementation of these new tariffs is scheduled to begin on October 18, marking a significant turning point in transatlantic trade relations. The US is aiming to retaliate against the EU for the subsidies granted to Airbus, a stance that has caused unease among European luxury companies. The possibility of tariffs on a wide range of luxury goods has sparked concerns among industry players, leading to a decline in shares for prominent companies such as LVMH, Kering, and Capri Holdings.
US officials have staunchly defended their decision to impose tariffs, arguing that the EU lacks grounds for retaliation. A meeting with the WTO has been requested to seek approval for the duties on October 14, underscoring the determination of the US to enforce its trade policies. These new tariffs are part of a broader trade strategy adopted by the Trump administration, which has resulted in escalating tensions with various trading partners around the world, particularly China.
The trade war with China, in particular, has already seen the imposition of multiple duties on apparel, footwear, and accessories imported from the country. A 25% tariff on handbags is scheduled to increase to 30% later this month. The move to target UK luxury apparel is emblematic of the wider trade tensions that are currently reverberating throughout the global economy, highlighting the far-reaching ramifications of these trade disputes.
For more information on the impact of tariffs on the luxury apparel industry, you can visit The Wall Street Journal and BBC News.
