Will luxury stocks be safe from trade wars?

As new global alliances are being formed, others are radically being eliminated, and markets are readying themselves for turbulent times when it comes to fashion exports.

With the threat of increased tariffs between formally friendly trading partners the stock market is responding to all kinds of possible scenarios. But not every fashion company listed on the exchange will be affected by the current waves of uncertainty.

Luxury stocks are likely to remain stable and buoyant because for the customer who can afford higher priced goods, a small increase is not likely to break their bank.

According to Market Watch, investors with equity in companies like LVMH, Tiffany, Luxoticca and PVH will be see out any retaliatory tariffs, and their goods will be in demand despite price increases.

Whilst China has lowered tariffs on luxury imports, and luxury goods companies responding by lowering their retail prices, all eyes will be on potential tariffs on American brands exporting to Asia and Europe and vice versa.

As Bloomberg aptly stated, fashion victims aren’t ready for a trade war: “Tariffs wouldn’t be a good look for fashion retailers.”

The sentiment is shared by Jumore Global Insights, who say there can be no winner in a trade war. Increasing prices for consumers and raising production costs for companies, the overall impact could be detrimental for economic growth.