Amid widespread concerns over potential sales decline following U.S. President Donald Trump's threat to impose 30-percent tariffs on imports from the Europe Union (EU), European luxury producers stand apart, saying their distinctive market positioning could spare them the impact.
For over two centuries, chandeliers from Lobmayr, a high-end glassware atelier in the Austrian capital of Vienna, have decorated landmark buildings across the globe, from Habsburg palaces to New York's Met Opera.
Even though a fifth of the company's glassware goes to U.S. customers, Washington's tariffs have not caused any major concern.
"Of course with a luxury product, by a very authentic Viennese manufacturer, the impact won't be that strong. But in the end, it will be about raising the prices," said Leonid Rath, managing partner at Lobmeyr glassware.
When asked about whether the American customers are going to pay these prices, he answered affirmatively.
Economists echoed this sentiment, noting that premium products are relatively insulated from tariff pressures.
"If you manage to produce luxury goods and export them to the U.S., I don't think that 30 percent tariff would change the demand for such products," said Mahdi Godsi, economist at the Vienna Institute for International Economic Studies.
But Austria does not only sell high-end decorations. Machineries and pharmaceuticals make up the biggest share of exports, sectors where price increases significantly hurt competitiveness.
European commercial bank UniCredit predicted that Austria's GDP would drop by 0.4 percentage point, with 15,000 jobs lost.
But Godsi said that it now depends on whether the EU can negotiate a trade deal before Washington's 30 percent tariff kicks in on August 1.
Intense talks between EU trade officials and their U.S. counterparts are ongoing with the EU hoping to negotiate a lower tariff rate.
"The current negotiations failed because the EU is somehow polarized with far-right parties, with far-right governments in the EU that are supporting Trump and with other countries that are not supporting Trump's policy, they do not want to appease Trump. But in the end, we need to see a solution," he said.
U.S. clients to pay for luxury price hike: producer on Trump's tariffs
