Latest news with #European-made
Business of Fashion
3 days ago
- Business
- Business of Fashion
LVMH Slide Signals No Quick End to Big Luxury's Malaise
Amid a slew of bad news headlines at its top brands, from data leaks to labour exploitation, luxury giant LVMH tried hard to tell a good news story when it published its latest earnings report this week. Yes, sales were down 4 percent in the second quarter — with a 9 percent slide in the group's core fashion and leather goods division weighing heavily on overall performance — but that's not so bad in the current economic context, the group suggested. Sure, profits slid 15 percent in the first half, but the group has made significant steps to preserve margin by reigning in costs; even fashion show budgets are under the microscope, chief financial officer Cécile Cabanis told analysts. 'LVMH showed good resilience and maintained its powerful innovative momentum despite a disrupted geopolitical and economic environment,' the group said in a statement. ADVERTISEMENT Luxury analysts have grasped on to glimmers of hope. 'Boy it's rough… but won't get rougher' was the headline takeaway from HSBC's earnings rundown. The silver lining is that the latest quarter could prove a trough for luxury's bellwether stock and many of its peers in the space, the bank's note went on to say. But the path to recovery from luxury's bruising slump is still likely to be a long slog. HSBC isn't expecting a proper sales pick up until 2026. In other words, the big luxury downturn isn't over yet. A pandemic boom in luxury spending has given way to more cautious consumption amid a gloomy economic climate, particularly in the key China market, weighing heavily on sales at many brands. And the macroeconomic outlook for the rest of the year remains uncertain at best. In its latest results, LVMH flagged ongoing pressure on sales in Asia, a one-time driver of staggering luxury growth. In the US, President Trump's trade war remains an unpredictable headwind. At present, higher duties (which could come in as high as 30 percent for European-made luxury goods) are set to come into effect from Aug. 1. Trade negotiations to try and bring that number down are ongoing. But many of the industry's woes are self-inflicted and LVMH is no exception. 'I don't buy the explanation that this is just a macro issue,' said Bernstein analyst Luca Solca. Fashion's own goals include whopping price increases without corresponding product innovation, leading aspirational customers in particular to pull back. To be sure, not all luxury labels are suffering equally. LVMH arch-rival Hermès has proved solidly resilient, leading a cohort of businesses that appear to be beating the slump. Earlier this year, it supplanted LVMH as luxury's most valuable company. ADVERTISEMENT Top-end brands like Hermès and Brunello Cuccinelli, which reported sales up by 10.7 percent in the first-half, are less exposed to aspirational clients, but they have also taken a more cautious approach to price hikes, retaining a sense of trust in their value propositions. Other outperformers include Prada's trendy outlier Miu Miu. Clearer signs of the growing gap between luxury's winners and losers are set to emerge next week, when a flurry of luxury heavyweights, including Gucci-owner Kering, Hermès and Prada, are due to report. Analysts are anticipating a wide range of results.
The Guardian
5 days ago
- Automotive
- The Guardian
Volkswagen takes €1.3bn hit from ‘high costs' of Trump tariffs
The German car manufacturer Volkswagen has said Donald Trump's US import tariffs have cost it more than £1bn in the first half of the year. Volkswagen said it had made strong progress realigning the company, which is considering cutting 35,000 jobs by 2030, but that it had suffered a €1.3bn (£1.13bn) 'decline in operating result primarily due to high costs from increased US import tariffs'. The company has also reduced its profit margin range to be between 4% and 5% for the year, based on an assumption that tariffs of between 10%, at best, and the current 27.5%, at worst, will be made permanent by the US president. The group, emblematic of German industry, also makes the Audi, Seat and Skoda brands as well as the luxury marques Lamborghini and Bentley, and commercial vehicles including Scania trucks. Its reduced revenues underline the German chancellor Friedrich Merz's continued appeal to Trump to urgently sign a deal on tariffs with concessions for the EU car industry. On Monday, the Vauxhall maker, Stellantis, said Trump's tariffs had already cost it €300m, while last week the Chinese-owned Swedish brand Volvo said it had paused sales of some models to the US and experienced a substantial fall in revenues in the second quarter of the year. German car exports to the US fell sharply in April and May as import tariffs imposed by Trump hit automakers' sales in their most important foreign market, the VDA industry association said on Thursday. Auto exports to the US fell by 13% in April and 25% in May from the same months the previous year, the VDA said. It added that 64,300 vehicles were shipped to the US over both months. Before Trump's return to the White House, the US charged a 2.5% tariff on European-made cars, while the EU had a 10% duty on vehicles imported from the US. The Volvo chief executive, Håkan Samuelsson, last week called on the EU to drop its 10% tariff, saying it was 'absolutely unnecessary' in an effort to accelerate a deal with the US. However, the EU is now closing in on a deal with the US for blanket tariffs of 15% on most goods with no special exemption for the automotive industry if a deal is struck before Trump's 1 August deadline. Sign up to Business Today Get set for the working day – we'll point you to all the business news and analysis you need every morning after newsletter promotion On Thursday, the EU said it thought a deal was within reach but Trump is not expected to imminently sign any executive orders as he begins a private visit to his luxury golf resorts at Turnberry in Ayrshire and Menie in Aberdeenshire. Separately, shares in German-owned Puma dropped by more than 18% on Friday morning after it said it expects US trade tariffs to cost it €80m in gross profit this year, and that it now expects to make a loss in adjusted earnings before interest and taxes. Much of the sportswear industry faces higher costs because of the US trade tariffs, as they rely on manufacturing in China, Vietnam, Cambodia and Bangladesh.
Euractiv
6 days ago
- Business
- Euractiv
Britain allows Ankara to buy Eurofighter jets
Turkey and Britain agreed to sell European-made Eurofighter jets to Ankara, in a big step toward securing the procurement of the jets over which Turkey has been negotiating for years. Turkey has been in talks to purchase 40 of the Eurofighter Typhoon jets, which are built by a consortium of Germany, Britain, Italy and Spain, represented by Airbus, BAE Systems and Leonardo for years. An agreement by all four members of the consortium is required to move forward with the sale. Berlin had remained the sole vocal hold out for the sale until today. Earlier today, the German Spiegel and Bloomberg reported that Germany had cleared the way for the delivery of 40 jets to Turkey, following a positive decision by the country's federal security council. The council, whose approval is required for arms exports, operates behind closed doors and the government generally does not comment on its decisions. For years, the German government had refused to give their green light to the sale, citing a wide range of concerns largely linked to Turkey's views on human rights. Earlier this week, Turkish President Tayyip Erdoğan said Germany and Britain took a positive stance on the sale of the jets, adding that Ankara wanted to finalise the purchase as soon as possible. (ap, vib)
Int'l Business Times
22-07-2025
- Business
- Int'l Business Times
AstraZeneca To Invest $50 Bn In The US As Tariff Threat Looms
British pharmaceutical giant AstraZeneca said Tuesday it would invest $50 billion in the United States by 2030 amid Donald Trump's threats to impose tariffs on the sector. The funds will boost its manufacturing and research operations in the US, including the construction of a multi-billion-dollar factory in Virginia, the company said in a statement. "Today's announcement underpins our belief in America's innovation in biopharmaceuticals," chief executive Pascal Soriot said in a statement. US President Donald Trump has opened the door to potential tariffs targeting pharmaceuticals, which had up to now benefited from exemptions to his sweeping levies on imports from trading partners. He ordered an investigation into pharmaceutical imports, suggesting that levies could reach up to 200 percent. The United States is a key market for the pharmaceutical industry, and AstraZeneca said it expects 50 percent of its revenue to come from the US by 2030. AstraZeneca has already begun transferring part of its European production to the United States, it announced in April. While the drugmaker could become exposed to US levies on its European-made products, Soriot has said that the impact would be limited due to the ongoing shift in production. Other major pharmaceutical companies, which had been exempt from tariffs for 30 years, have in recent months begun shifting investment and production to the United States. Swiss pharmaceutical giants Roche and Novartis and France's Sanofi have all announced multi-billion-dollar investments in the US. "For decades, Americans have been reliant on foreign supply of key pharmaceutical products," US Commerce Secretary Howard Lutnick said in a statement. He added that the new tariffs are focused on "ending this structural weakness". Tuesday's announcement included a new factory in Virginia, which will be the company's "largest single manufacturing investment". It adds to AstraZeneca's previously announced $3.5 billion investment in the US by 2026. "Soriot implied... that AstraZeneca wasn't wedded to a particular country and that it would invest wherever it made financial sense," said AJ Bell investment director Russ Mould. However, he noted that "the more business it does in the country, the greater the likelihood that investors might push for AstraZeneca to switch its main stock listing to the US." The pharmaceutical company abandoned plans earlier in the year to build a GBP450 million ($606 million) vaccine plant in the UK city of Liverpool, citing timing issues and a reduction in subsidies offered by the government. The move "was the big clue that it was losing patience with the UK government," said Mould. AstraZeneca reported a first-quarter profit rise of over 30 percent in April, noting that 40 percent of its revenue was generated in the US.
Economic Times
21-07-2025
- Automotive
- Economic Times
Tariff engineering: How companies are outsmarting Trump
Delta Air Lines pulled off an age-old trick on US President Donald Trump who has imposed steep tariffs on imports which are pinching American companies. Delta took brand-new Airbus jets sitting in Europe, yanked out their US-made engines, shipped those engines back to the States, and left the rest of the aircraft To avoid Trump's to a July 11 report by Bloomberg, Delta has been cannibalising new A321neo aircraft, assembled in Europe and fitted with Pratt & Whitney engines, for parts to keep its grounded US fleet flying. By removing the engines, which are manufactured in the US, and shipping them home separately, Delta avoids the 10% import duty levied on European-made aircraft under Trump-era trade policies. The planes themselves remain parked in Europe. They can't fly in the US yet anyway, their seats haven't cleared US regulatory certification. So instead of paying duties on entire aircraft, Delta is importing only the parts it needs, duty-free. CEO Ed Bastian was frank about the tactic. 'We are not planning to pay tariffs on aircraft deliveries,' he said during the company's latest earnings call, adding that Delta will continue using the workaround. Earlier this year, Delta routed new Airbus long-haul jets through Japan before bringing them into the US, another move to dodge import in 2020, the airline used similar tactics, redirecting deliveries through places like Amsterdam, Tokyo, and El Salvador to avoid tariffs during peak trade isn't a one-off. It's a workaround might look extreme, but it's hardly unusual. US companies across industries, from sneaker makers to car manufacturers, have been using similar strategies to avoid rising import duties. Call it tariff engineering or just smart loophole hunting. The goal is simple: cut import costs without breaking the law. And this is entirely Foote, a customs lawyer at Kelley Drye & Warren in Washington D.C., sees no issue with the practice. 'There is nothing inherently illegal or even untoward about leveraging strategic design choices that result in creating different products that are subject to different tariff classifications and duty rates,' he told CNBC. 'Tariff engineering is one of the few things you can do to try to get it right and reduce your duty liability.' What is tariff engineering? Tariff engineering is the art of designing or altering a product, legally, to qualify for a lower import tax. It doesn't mean cheating the system. It just means working within the rules and playing them to your advantage. Merritt v. Welsh (1882) Tariff engineering isn't new. One of the earliest examples dates back to the 1881 US Supreme Court case Merritt v. Welsh, when a sugar importer found that coating lighter sugar with molasses helped avoid higher tariffs. The case went all the way to the Supreme Court, which ruled that as long as the goods were honestly declared and inspected, there was nothing illegal about gaming the system. At the time, the US taxed sugar based on its colour, using something called the Dutch standard. Darker sugar = lower quality = lower what did the importer do? He took highly refined (white) sugar and added molasses to darken it. That way, it looked like low-grade sugar and qualified for a lower should've worked, until the Port of New York stepped customs office didn't buy it. They ran chemical tests, found the sugar had been intentionally darkened, and slapped on the higher tariff anyway. But the case reached the Supreme Court, and the justices sided with the importer. Why? Because the law at the time said tariffs had to be based only on colour, not chemical analysis or Matthews was of the opinion that even if the sugar was darkened on purpose, that wasn't illegal. 'Great stress is laid on the charge that sugars are manufactured in dark colors on purpose to evade our duties. Suppose this is true; has not a manufacturer a right to make his goods as he pleases?... If the duties are affected, there is a plain remedy. Congress can always adopt such laws and regulations as it may deem expedient for protecting the interests of the government.' Fast-forward to today, and tariff engineering is practically a full-time job for trade compliance teams across corporate America. Take Columbia Sportswear. They've been upfront about it. 'I have a whole team of people that work … with the designers and developers and merchandisers and with customs,' said Jeff Tooze, the company's VP of global customs and trade, in a 2019 interview with Marketplace. Their mission: bake tariff classification into the product design process. For instance, CNN reported that adding small zippered pockets below the waist on shirts is a simple tweak that can shift the product into a lower-duty category. That's how you end up with shirts sporting oddly placed zippers, designed not for fashion or function, but for tariff relief. Footwear brands play the same game. Converse, for instance, has been known to put felt soles on some All Star sneakers. The reason? Classification. Felt soles can move the shoes into the 'house slipper' category instead of 'athletic footwear', and house slippers come with significantly lower around the world use a system of more than 5,000 product classification codes to determine how much tariff to apply to imports, according to manufacturing the shoes overseas with felt soles, Converse can make a case to US customs that they qualify for the lower-duty category. It's not about aesthetics but a strategic design decision aimed at cutting costs. The loophole economy isn't just about design Sometimes, companies don't bother changing the product. They change the route. Or the label. Or where the product waits. Delta's stripped-down aircraft are one version of this. Another is the bonded of it as international limbo. Goods can enter the US and sit inside a government-regulated storage facility, as long as they remain locked up in a customs-regulated warehouse, for up to five years, duty-free, until the importer decides the timing is right to clear them through only pay the current tariff rate when they take goods out of storage. It's a bet that tariff rates will go down in the short or medium Hartry, who runs Howard Hartry, a customs brokerage by the Port of Los Angeles, says the demand for bonded warehouses has exploded since Trump's tariffs took hold. She told CNN that 95% of inquiries she receives now involve goods from no cap on the value a company can store in a bonded warehouse, the only real limit is physical to Hartry, her clients are stashing everything from lithium batteries and metal rods to TVs and treadmills. The value of these goods ranges between $37,000 and $500,000. She's well aware of how hard tariffs have hit her clients. But for her business, they've been a lifeline. 'It's saving our business, which we're grateful for,' she told CNN's Julia Vargas. Why all of this still works Despite the Trump administration's aggressive tariff hikes, loopholes remain. Sometimes products are explicitly exempt. Sometimes a lower rate applies if you swap a fabric or a metal. Other times, it's about knowing the right Harmonised Tariff Schedule (HTS) code, a system with over 5,000 lawyers are seeing a boom in business. Erik Smithweiss, a partner at GDLSK, said that companies come to his firm asking whether tweaks to their products might qualify them for a more favourable code.'We are working with companies who say, 'Gee, I really want to be on this list, look at my tariff codes,'' he told CNN. If the product can be modified, legally and substantially enough, his team will help make it tariff engineering has its limits, and pushing too far can backfire. Customs officials have the authority to test materials, scrutinise designs, and if they suspect deception, they can impose steep fines. Ford learned that the hard way The automaker was accused of sidestepping a steep 25% tariff, known as the 'chicken tax', by disguising cargo vans as passenger vehicles. The 'chicken tax' dates back to 1964, when the US imposed a 25% tariff on imported light trucks in retaliation for European restrictions on American workaround? Ford shipped Turkey-assembled Transit Connect vans to the US with temporary rear seats and minor interior tweaks, just enough to classify them as passenger vehicles and qualify for a much lower 2.5% import duty. Once the vans cleared customs, the seats were removed, and the vehicles were sold as cargo and Border Protection and the Department of Justice called it a clear attempt to dodge higher tariffs, saying the rear seats were never meant to carry passengers and were simply 'an artifice or disguise.'The case spanned years and involved hundreds of thousands of vans imported between 2009 and 2013. Courts consistently ruled in the government's favour. The Supreme Court refused to hear Ford's appeal in March 2024, Ford agreed to pay $365 million, roughly half in back duties, the rest in penalties. The company said it 'strongly disagreed with many of the characterisations' but chose to settle and end the legal battle. It did not admit fine is one of the largest customs penalty settlements in recent history. The risky business of skating the line Not all industries can play this game equally. Apparel and footwear can get by with easy tweaks and quick wins, but for aerospace, electronics, and medical devices, it's a completely different ballgame.'You might be looking at another 12 to 24 months of testing, certification, and validation in order to get that done,' said Andrew Wilson, a supply chain strategist at Supplino, to CNBC. That's time, money, and regulatory for many companies, the savings are worth it. Izzy Rosenzweig, CEO of logistics firm Portless, told CNBC that one of his clients switched hoodie production from synthetic to cotton to save 15% in duties. That's a serious margin in Industries, the RV giant, said earlier this year that it's actively working with trade experts to explore mitigation strategies, tariff engineering and deferrals it's not just the goods themselves. Even small tweaks to product add-ons can lead to big savings. Customs lawyer John Foote described to CNBC a lapel pin that was redesigned to include small pieces of cubic zirconia. That change moved it out of the 'festive article' category (14% tariff) into the 'jewellery' category (lower tariff). A small shift with a big game has rules. You just have to learn them. Tariff engineering is not fraud. But it is a tightrope walk. There's a fine line between clever strategy and misclassification. Companies can request a binding ruling from US Customs and Border Protection to confirm whether a classification will hold. But that comes with a risk: once you ask, you can't walk it back. If Customs disagrees, you're is why many firms prefer to stay just under the radar. Quietly adapting. Carefully designing. Relentlessly optimising.
