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Handbags, Champagne and tariffs

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Handbags, Champagne and tariffs

Anyone hoping for a respite from the trade wars would have been disappointed last week as U.S. President Donald Trump set his sights on a new target: France.

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In response to France's digital tax that would take 3% of the total annual revenues of the likes of Google, Apple, Amazon and Facebook for services aimed at French users, Trump proposed 100% tariffs on $2.4 billion worth of French goods, including handbags, Champagne, cheese and makeup.

A Panjiva analysis of import data shows that should that tariffs come into effect, luxury goods majors LVMH and Kering and cosmetics retailer L'Oréal would be hit the hardest. This would add to an increasingly complex picture for the luxury sector, which is in the middle of an M&A arms race while grappling with instability in one of its key markets, Hong Kong.

The tariffs may be a warning to the likes of Austria, Italy and Turkey, which also have been exploring digital taxes. They also provide food for thought for the European Union as a whole. The bloc's own trade negotiations with the U.S. "have been going nowhere fast, and this latest incident doesn't bode well for quick take-up by [EC] President [Ursula] von der Leyen," Peter Allgeier, president of consulting firm Nauset Global LLC and a former deputy U.S. trade representative under the Bush and Obama administrations, told Market Intelligence.

Consumer Edge is a weekly collection of critical developments across the automotive; retail; and food, beverage, and tobacco industries. Drawing on exclusive analysis and value-added content from the Consumer News team at S&P Global Market Intelligence, it is published every Thursday. Click here to subscribe.

Chart of the week

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Automotive

Battery prices fall as automakers flip switch on EVs, research says

Energy research company BloombergNEF predicts that battery prices will fall below $100 per kilowatt-hour in 2024 as electric vehicle demand grows.

British drivers launch 'dieselgate' case against Volkswagen in High Court

The German carmaker is arguing that the software it fitted to diesel cars sold in the U.K. did not constitute an illegal defeat device in that market.

Retail

LVMH, Kering, L'Oréal to bear brunt of proposed US tariffs on French goods

France's major luxury goods companies look set to be hit by the proposed 100% tariffs, which would apply to products including handbags, Champagne and cosmetics.

Tariffs on French goods expected to deter future digital taxes on big tech

Proposed retaliatory tariffs from the U.S. trade representative in response to a French digital tax could deter other countries from implementing similar types of taxes, analysts say in interviews.

Trump tariffs on France set stage for tumultuous 2020 for US-EU relations

Planned U.S. tariffs on $2.4 billion of imports from France could stifle chances of a U.S.-EU trade deal and further push the two sides apart on trade, some analysts say.

Kering's reported interest in Moncler signals more M&A in luxury sector

The Gucci owner's last major acquisition was six years ago but that may change as the biggest companies in the luxury sector look to grow and diversify through M&A.

Retailers see more online shoppers over Black Friday; Cyber Monday sales jump

The number of consumers who shopped over the five days of Nov. 28-Dec. 2 jumped 14% to 189.6 million, according to a survey by the National Retail Federation and Prosper Insights & Analytics.

Prolonged Hong Kong protests turn shoppers, tourists away

Retail sales in Hong Kong fell 24.3% in October, a record decline, and the malaise is expected to continue in the coming months.

Food, Beverage & Tobacco

Campbell Q1'20 sales miss expectations as retailers streamline soup selection

The company also cut its 2020 sales growth guidance as it off-loaded its chips business in Europe.

Kroger, Altria lead S&P 500 Consumer Staples index November

The Consumer Staples index booked a 1.3% gain after Kroger and Altria saw double-digit share price increases during the month.

Kroger writes down investment in small-box grocer

The Cincinnati-based grocer had trouble figuring out how to make Colorado-based Lucky's small format "work effectively," Senior Vice President and CFO Gary Millerchip said Dec. 5.

Agriculture loan delinquencies rise in Q3'19, but some see signs of optimism

Despite Dean Foods' bankruptcy and an uptick in delinquencies, agriculture experts are feeling positive about higher dairy prices.

S&P 500 Consumer Staples and Discretionary indices

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