How Could the Impact of Import Taxes Affect South Florida’s Luxury Industry?
By Ismael Rodriguez
President Donald J. Trump’s proposed import tariffs on Mexico may lead to implementations of taxes for all other countries.
The 20 percent import tax can stunt a growing luxury industry in South Florida, in particular Miami, a consumerist mecca where foreign, luxury shoppers have flooded since the market crash in 2008, planning their purchases around the best global shopping—from exotic cars to designer apparel.
“The 20 percent tax would result in a low single digit increase in the cost of most luxury goods products to the luxury shopper,” Marie Driscoll, CEO and chief consultant of Driscoll Advisors, told the press. “Moreover, luxury shoppers are global.”
Wealthy shoppers are conscious about pre-tax vs. post-tax prices, and they typically have an array of options—this will play a significant role on high-end shops across Miami.
The Bal Harbour Shops, a high-end mall, for example, attributes more than 80 percent of their sales to tourists, according to what CEO Mathew Whitman Lazenby told the press. Miami’s Design District is also among locations filled with foreign, high-end stores, serving an abundance of tourist and locals.
Adding the 20 percent tax to the products sold by these high-end shops can make even the wealthy cringe at the post-tax prices, having them scatter to other import-friendly countries with the same stores.
“Consumers care about the after-tax price, not the before price,” Steve Allen, associate dean for Graduate Programs and Research at NC State Poole College of Management, told the press. “This means that any tax is an additional expense that sellers have to cover, an expense that will have to be passed on to consumers.”
This is not to say all luxury brands are in trouble. Internationally renowned brands like Gucci, Dior, Prada and Versace will remain profitable in all corners of the U.S. by maintaining or increasing their desirability among luxury shoppers. For these brands, price is a small component.