Hermès will sell its bags and scarves at a higher price in the U.S. than in other parts of the world, in response to President Donald Trump’s tariffs.
The French company, which had long resisted the sector-wide slowdown and became the most valuable luxury company ahead of LVMH earlier this week, said it plans to pass the additional costs from tariffs to its affluent customers.
This will apply in addition to Hermès’s planned price hike of 6% to 7% this year. Its bags typically cost over $10,000, with the rare ones even selling for more than $85,000.
“We are going to fully offset the impact of these new duties by increasing our selling prices in the United States from May 1, across all our business lines,” Hermès CFO Eric du Halgouët said in an interview with journalists on Thursday, Reuters reported.
Hermès warned it might do so during its annual results announcement in February, as moving production is out of the question.
“We’re very attached to our production where it is,” executive chair Axel Dumas said, according to Bloomberg.
The Birkin and Kelly bag maker shared its pricing plans along with its first-quarter results on Thursday. It reported €4.1 billion in sales, up 7% in the first three months of the year (in constant exchange rate terms) compared with the same period in 2024.
The figures fell short of analyst expectations owing to softer demand in China and lower revenue in the parts of its business that draw more aspirational shoppers, including perfume and watches.
“In a complex geopolitical and economic context, the house is strengthening its fundamentals more than ever,” Dumas said in a statement.
Nonetheless, Hermès’s staying power with its wealthy clientele helped its business grow in every geography. Given the company’s exposure to the topmost tier of shoppers, it remains relatively sheltered from the impact of tariffs on broader consumer sentiment.
“We expect the group to benefit from far superior pricing power versus peers,” Jefferies analysts led by James Grzinic said in a Thursday note.
Trump slapped a 10% tariff on imports from around the world this month after delaying higher duties of 20% and above on the European Union. Many luxury purveyors lack a manufacturing presence in the U.S., including Gucci owner Kering, and they value having “Made in France” or “Made in Italy” tags. This leaves companies with few options beyond passing additional price increases on to customers.
In theory, because of their relatively price-agnostic base of shoppers and the desirability attached to the goods, the demand for all things luxury doesn’t respond too drastically to price increments. But relentless hikes in recent years against the backdrop of economic pressures have already dampened the appetite of many shoppers, contributing to the luxury sector’s slowdown.
Estimates suggest that prices are now 61% higher than in 2019, and whatever growth brands achieved also came down to price rather than volume.
“Several of the industry’s growth-driving engines have stalled. Price increases have reached a ceiling, and higher prices are negatively affecting demand from aspirational luxury consumers,” McKinsey said in its “State of Luxury” report released in January.
The anomalous world order we live in could force brands into a corner: either hike prices for shoppers to pay or find a way to make manufacturing in the U.S. work.
So, while Hermès may be the first luxury giant to initiate price hikes, it surely won’t be the last.
Representatives at Hermès didn’t immediately return Fortune’s request for comment.
