October 9, 2026
The global luxury goods industry, whose value is estimated at about $350 billion, is facing increasing pressure as a result of China’s tightening of its tax measures on the wealthy, in conjunction with a decline in consumer spending in the United States, which threatens to exacerbate the challenges facing this vital sector.
In this context, the Chinese authorities obliged the wealthy, who used external trust funds to protect their assets, to disclose their tax obligations and pay the accumulated dues from previous years no later than October 22. Expectations indicate that imposing a 20% tax may prompt some high-net-worth individuals to postpone purchasing decisions.
These measures are of great strategic importance, given that Chinese consumers account for about 20% of total global purchases of luxury goods, having for many years been the main engine of growth for major brands.
Data from Chinese shopping centers showed a sharp slowdown in sales growth during the summer, and the sector’s continued weak performance during the third quarter, amid disparities in results between brands. “Quiet luxury” brands, such as “Brunello Cucinelli” and “Loro Piana”, achieved relatively better performance compared to brands that rely on prominent logos, such as “Louis Vuitton” and “Gucci”.
These negative repercussions have extended to cast a shadow on the shares of major European companies. The shares of the LVMH and Hermes groups have declined by about 40% since the beginning of the year, while the shares of the Kering Group, which owns the Gucci brand, have fallen by 29%.
In the American market, the industry faces additional challenges represented by a decline in spending on luxury goods via credit cards for the third month in a row during the month of September, according to Citi Bank data.
On the other hand, the fine jewelry sector showed relatively better flexibility and performance, supported by the growing demand for gold and precious metals, which the wealthy see as a safe haven and assets more capable of retaining their value.
Financial markets are awaiting with great interest the financial results of LVMH, Kering, and Hermes during the month of October, searching for clear indicators that measure the sector’s ability to restore the growth path, in light of the decline in demand in the two largest global markets: China and the United States.
