Tariffs Are Challenging the Cachet of Luxury Goods From Europe

US tariffs are now shaking the foundations of Ubrique's business model—and that of the broader luxury industry

- Nick Kostov

Europe's luxury brands have long sold pricey handbags based on the mystique of where they are made. Now the trade war is probing the value of producing in places like this sun-kissed town.

Ubrique's workshops have pumped out leather goods for Chanel, Louis Vuitton, and other brands for years, employing about a quarter of the town's population of 16,000. A giant statue of the patacabra, a wooden tool used to shape and smooth the leather, rises by the road leading into town.

"We're all basically living off leather here," said José Antonio Bautista, the town's deputy mayor.

President Trump's tariffs are now shaking the foundations of Ubrique's business model—and that of the broader luxury industry. On Friday, Trump threatened a 50% tariff on goods imported from the European Union.

European brands have long cultivated the image that Old World heritage uniquely positions the continent to create goods for the world's most discerning customers—justifying their eye-watering price tags.

While high margins offer brands some protection from tariffs, Trump's push to shift production to the U.S. has sparked fresh scrutiny of the "Made in Europe" value proposition. The worry for some brands: Luxury goods produced in America won't carry the same cachet with consumers.

"It wouldn't make sense to me to have Italian Gucci bags made in Texas," François-Henri Pinault, chief executive of the group that owns Gucci, Saint Laurent, and Balenciaga, told French lawmakers earlier this month. "It doesn't make sense to my clients. I can't explain that."

The allure of European provenance is already being questioned in the industry's second-biggest market: China. After Trump announced his tariffs, a wave of videos flooded TikTok, purporting to reveal the true cost of luxury by showing how a range of high-end handbags—including the Hermès Birkin, which sell for more than $10,000—can be cheaply counterfeited in a Chinese factory.