Deutsche Bank, the city broker, has lowered the target share price for a range of luxury firms as Trump's tariffs begin to influence analyst predictions.
The broker assigned a 'Hold' rating to Richemont, LVMH, Moncler and Kering, reducing the share price for each company, as reported by .
"The direct impact of the tariffs is not a huge headwind in our view... However, weaker global stock markets and the broader economic uncertainty will weigh on confidence and we see this further postponing a recovery in luxury demand," analysts commented.
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Hermes was the sole firm to receive an upgrade, with Deutsche Bank shifting its recommendation from a 'Hold' to a 'Buy' and raising the target share price from €2,220 to €2,550 (£1,911 to £2,195).
Mamta Valechha, Consumer discretionary analyst at Quilter Cheviot, stated that Hermes would benefit from its "strong pricing power and higher-end positioning" despite the inevitable single-digit price increases.
"However, how the US (and global) luxury consumer responds to potentially reduced global economic growth remains unknown," Valechha added.
There was a significant sell-off in luxury markets after Trump announced tariffs on April 2. Burberry, Kering, and LVMH have dropped 16.6 per cent, 16.2 per cent 12.5 per cent, respectively, since April 2.
Traditionally safe bets Hermes and Ferrari have dropped 8.5 per cent and nine per cent, respectively.
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Analysts were initially banking on a resurgence in the luxury sector following a dip caused by the cost-of-living crisis in Europe and economic downturn in China during 2023.
"It is no longer clear that the third quarter of 2024 was the nadir for luxury demand," stated analysts from Deutsche Bank.
"The luxury recovery in the fourth quarter now looks likely to be the anomaly and not the trend."
Deutsche Bank downgraded its growth forecast for the entire luxury industry in 2025, decreasing it by three percentage points to an anticipated two per cent expansion.