VIDEO: US-China Tariff Wars Might Push Western Luxury Brands To Collapse As China Begins Exposing Those Produced In China

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In a high-stakes showdown that could rattle the very seams of the fashion world, the escalating tariff war between the United States and China is threatening to crush not just economies—but Europe’s billion-dollar luxury fashion houses. For those that are unaware, Tariffs are taxes/extra costs imposed by a government on imported goods, effectively raising the price of those goods for domestic buyers and in many cases makes then less likely to buy those good. They are typically calculated as a percentage of the value of the imported goods.

Unlike many nations that have traditionally tiptoed around U.S. trade policy, China is going toe-to-toe with Washington’s latest tariff hikes. Under the revived “America First” agenda, former President Donald Trump—seeking re-election—has reimposed aggressive tariffs on a wide range of imported goods. As of early April 2025, tariff rates have surged to as high as 60% on Chinese-made electric vehicles, 40% on select textiles, and 25% on general consumer goods, sparking global concern.

But China Strikes Back

In swift retaliation, Beijing announced a series of countermeasures aimed squarely at American and European interests. These include new export restrictions on critical manufacturing components, heightened tariffs on finished goods and raw materials, and stricter regulations on luxury imports.

Chinese Ministry of Commerce spokesperson Zhao Lijian stated in a recent briefing:

“China will not be bullied. We will respond proportionally and protect our economic sovereignty.”

But behind the sharp diplomatic language lies a quiet storm brewing for Western luxury brands—especially those that rely on China not just as a market, but as a manufacturing powerhouse.

Luxury’s Hidden Vulnerability

While most consumers associate Gucci, Louis Vuitton, Prada, and Coach with the glamour of Milan, Paris, or New York, the hard truth is many of their goods are assembled—or at least partially produced—through Chinese Original Equipment Manufacturers (OEMs). These manufacturers have become the backbone of high-volume fashion production, delivering craftsmanship at scale for lower costs.

According to Global Fashion Supply 2024, over 38% of luxury accessories and handbags sold in Europe and the U.S. have production or assembly lines in China, often in partnership with OEMs like Shenzhen-based Wingfat or Shanghai Winhope.

If China decides to tax or restrict these OEM exports—or if retaliatory tariffs make importing them to the West economically unviable—luxury brands will be squeezed from both ends.

Fashion industry analyst Isabelle Tournier warns:

“If the tariffs continue to mount, brands will have to choose between shrinking their margins, moving production overnight—an impossible task—or raising prices for consumers, which risks alienating their market during an already shaky economic climate.”

China Read To Expose Western Brands

For decades, luxury fashion houses from Gucci to Louis Vuitton, Prada to Coach, have wrapped themselves in narratives of handcrafted Italian elegance or Parisian sophistication. However, much of the real manufacturing muscle has come from OEM factories in Chinese cities like Guangzhou, Wenzhou, and Shenzhen. These facilities, often unnamed and uncredited, have been producing bags, shoes, sunglasses, and even “Made in Italy” tagged apparel for decades.

“Luxury brands have long relied on China for quiet, high-quality production at scale,” says Zhang Wei, a former logistics executive in Shanghai’s textile district. “Now that politics are in play, China could easily show the world how many of those so-called ‘European’ luxury goods are born right here.”

And this threat isn’t idle.

Not only are the Chinese exposing they are the producers of these good, but they are encouraging clients to skip the meaningless branding by the west and buy the bags and other good directly from China as you can see in the video above and below.

The scenario echoes what recently happened with Nigerian label Winston Leather, which went viral for revealing its long-time role in producing luxury leather goods for several European labels. The exposure sent ripples through the African fashion community and shook consumer trust in brands that had long touted “exclusive European craftsmanship.” The revelation ignited debates on post-colonial exploitation, hidden manufacturing practices, and the need for more transparent fashion ethics.

VIDEO: The Truth About ‘ITALIAN LEATHER’ Exposed By TikToker And How It Actually Is Nigerian Leather

Déjà Vu from the Past?

This wouldn’t be the first time fashion has felt the burn of trade wars. In the early 2010s, U.S.-China textile tensions led to increased costs and delayed collections for major fast fashion brands. But this time, it’s not just polyester and cotton—it’s Italian leather, French embroidery, and Swiss timepieces caught in the crossfire.

What makes this moment more dangerous is the timing. European luxury houses are still recovering from the COVID-19 downturn, and though markets rebounded in 2023 and 2024, many are yet to hit pre-pandemic profit levels. A squeeze in their supply chain could be the final straw.

The Bigger Picture: Geopolitics Meets Couture

Some speculate this might even be part of a wider geopolitical chess game. With tensions mounting between the U.S. and the EU over digital taxes, NATO funding, and recent skirmishes over African influence zones, some suspect Germany and France are quietly being dragged into a proxy economic conflict—one that could use their prized fashion exports as bargaining chips.

As Africa, South America, and Southeast Asia emerge as new luxury markets, some voices in fashion activism are even calling for a “decolonization of fashion”—urging brands to shift production and investment into non-traditional regions.

Until then, the world’s most glamorous industry may be heading into one of its ugliest financial seasons yet.