European Luxury Sector Faces Sharp Decline Amid Trump Tariffs and Chinese Slowdown
The European luxury sector suffered a 3.63% drop driven by China's economic slowdown and new U.S. tariffs, with EU officials condemning Trump's threats and preparing sanctions.
- • European luxury sector declined by 3.63% due to Chinese economic slowdown and U.S. tariff threats.
- • Trump plans a 10% tariff on European countries involved with Greenland, potentially rising to 25%.
- • EU prepares to reactivate €93 billion in sanctions against the U.S.
- • European Economy Commissioner Valdis Dombrovskis publicly rejected Trump's tariff threats as unacceptable.
Key details
On January 19, 2026, the European luxury market experienced a notable downturn as it declined by 3.63%, influenced by a combination of slowing Chinese economic growth and new U.S. tariffs announced by President Donald Trump. All twelve companies in the Stoxx 600 luxury index closed negatively, with Pandora suffering the steepest decline at 5.53%, followed by Adidas at 5.19% and LVMH at 4.33%. This drop reflects concerns regarding China's economic performance, where GDP growth slowed to 5% in the previous year and further decreased to 4.5% in the final quarter—the lowest in three years. Additionally, China's weak domestic demand was signaled by a mere 0.9% rise in retail sales in December and a 2.7% drop in industrial production.
Trump's tariff plan includes a 10% levy starting in February on European countries that have sent troops to Greenland and threatens to increase tariffs up to 25% by June. In reaction, the European Union is preparing to reinstate sanctions worth €93 billion against the United States.
European Economy Commissioner Valdis Dombrovskis, addressing the matter ahead of a Eurogroup meeting in Brussels, strongly condemned Trump’s tariff threats and the contentious approach to Greenland, stating that such coercive tariff threats are "not acceptable." He underscored the potential economic repercussions for Europe and advocated for diplomacy over economic pressure.
Analysts highlight that the European luxury sector, particularly in Spain, is highly vulnerable to these developments. Manuel Pinto from XTB remarked that the luxury and automotive industries are the most dependent on trade relations with the U.S. The unfolding tensions present significant risks to Europe's trade-dependent luxury market, emphasizing the need to monitor both geopolitical moves and Chinese economic indicators closely.
This article was translated and synthesized from Spanish sources, providing English-speaking readers with local perspectives.
