Luxury Briefing: Brazil’s tariff shock has luxury brands rethinking distribution

For U.S. fashion businesses reliant on Brazilian sourcing, the implications are immediate. The U.S. runs a $6.8 billion trade surplus with Brazil, and the South American country plays a rising role in leather and footwear production for brands such as Veja and Alexandre Birman.

Analysts from investment bank JPMorgan called the Brazil move “most surprising,” writing in a July 11 note that “it is possible these tariffs will never be implemented, as some in the market are hoping for.” But uncertainty is already altering brand behavior.

High-end footwear brand Larroudé, which produces in Brazil and sells predominantly in the U.S., is among those directly affected. “This is going to hit our bottom line hard,” said co-founder Marina Larroudé. “The cost of exporting just doubled overnight.”

“[Back in May] I’d spoken to brands who were nervous about the unpredictability of the political situation,” she said. “At the time, I didn’t think it would reach us.”

Now facing the brunt of the fallout, Larroudé is choosing pragmatism. “We’ve decided to accelerate our Brazilian distribution plans,” she told Glossy. “There’s a real pride in Brazilian-made goods. We’ve heard from so many Brazilian customers who’ve said, ‘We’ve been waiting for this.’”

Larroudé is now exploring multi-channel retail in Brazil, including DTC e-commerce and local wholesale. “This may be the moment we go deeper into our home market,” she added. So far, the brand has seen 300% month-on-month sales growth in Brazil through word of mouth.

Four other Brazilian brands contacted by Glossy declined to speak on the record, citing fear of retaliation by customers and international wholesalers for taking sides on the trade war.

Robin Mellery-Pratt, founder of brand intelligence company Matter, said fashion is facing more than just a temporary cost issue. “Once tariffs reach 50%, they’re not just a margin issue. They’re an existential issue, in terms of pricing architecture, distribution strategy and brand positioning,” he said.

“Luxury brands operate on very carefully constructed global pricing strategies. A 50% shift breaks that system. It’s not just about raising prices; it’s about rethinking how, where and even if you can sell.”

He noted that Brazil, while not as dominant as China or Italy, has been “a peripheral but important sourcing hub for years, especially for leather goods and shoes.” As brands moved to diversify from China, Brazil gained favor for its craftsmanship, currency advantage and proximity to the U.S.

“This [tariff on Brazil] may speed up brands’ moves to reassess where they want to make things and what’s viable for the long term,” Mellery-Pratt said.

Tapestry’s Gen Phoenix deal gains relevance as tariff pressure mounts

Although announced last week, Tapestry’s expanded investment in the recycled leather startup Gen Phoenix has taken on new significance as tariff tensions escalate and the luxury sector faces renewed scrutiny over material sourcing and supply chain resilience.

The $15 million funding round, led by venture capital fund Material Impact and joined by Tapestry, which now holds a 9.9% equity stake, includes a three-year supply agreement that will see Gen Phoenix’s materials used in Coach, Kate Spade and Stuart Weitzman products. What seemed like a sustainability play is now emerging as a critical operational play.

“Supply chains don’t pivot overnight,” said Scott Roe, CFO and COO of Tapestry. “But this puts us in a position of strength as the tariff environment shifts, and it’s backed by tech investments that let us move faster than most.” Roe pointed to years of behind-the-scenes spending to modernize Tapestry’s cloud infrastructure and data architecture. The company can now use AI to simulate trade routes, model costs and react in real time. Those capabilities offer an edge as U.S.-China tensions threaten fashion’s reliance on traditional leather manufacturing hubs.

The Gen Phoenix deal also stands out against a decline in material innovation. Brands have been retreating from early-stage sustainability partnerships, citing cost, complexity and lack of scale. “There’s a graveyard of capsule collections,” said Gen Phoenix CMO Elise Swinehart. “Our partnership [with Tapestry] is different — it’s about price, performance and planet. If you don’t hit all three, you don’t scale.”

Originally introduced through Coach’s Coachtopia line, Gen Phoenix’s recycled leather, made from recovered leather waste, is being featured in both product linings and outer fabrications. Its use in Coach’s products is backed by a technical development roadmap and direct input from Coach’s design and materials teams. 

“We’re not a vendor; we’re co-developing this together,” said Gen Phoenix CEO John Kennedy. He called the deal a validation of Gen Phoenix’s platform at a time when consumer brands are reevaluating long-term sustainability goals under financial pressure.

Stat of the Week

The Met museum welcomed 5.7 million visitors in fiscal 2025, up 5% year-over-year, with local attendees making up 62%, online traffic topping 27 million, and standout shows like “Sargent and Paris” and “Superfine” drawing 427,000 and 291,000 visitors, respectively.

News to know

• The Spring 2026 New York Fashion Week dates have been announced: September 11–16. It will open with a show by Michael Kors and feature over 60 shows by brands including Calvin Klein, Khaite, Luar, Toteme, Cos and Off-White.
• Rebecca Minkoff has signed 12 new licensing deals across handbags, footwear, loungewear, sleepwear and jewelry, with products set to begin rolling out in September. The brand was sold to Sunrise Brands in 2022.
• Klarna and Poshmark have launched a U.S. in-app resale partnership, enabling Klarna users to instantly list past purchases on Poshmark with pre-filled details, just in time for the back-to-school season.
• G-III has filed a $250 million lawsuit against PVH over denied Calvin Klein and Tommy Hilfiger license extensions, alleging contract breaches and retaliation. In 2022, PVH reclaimed its core licenses under its PVH+ turnaround plan.
• Louis Vuitton has disclosed a data breach affecting roughly 419,000 customers in Hong Kong, and similar incidents have hit its divisions in the U.K., South Korea, Turkey and Australia. Fellow LVMH brands Christian Dior and Tiffany & Co., as well as Richemont’s Cartier, have also suffered customer data breaches this year, though none involved payment information.
• EssilorLuxottica has acquired the lens component division of South Korea’s PUcore, including its R&D, production and IP assets, to strengthen its upstream lens supply chain. The deal is expected to be finalized by the end of the year.

Listen in

On this week’s Glossy Podcast, senior fashion reporter Danny Parisi and international reporter Zofia Zwieglinska dive into the latest in fashion news, including Saks Global’s executive shakeup amid financial scrutiny, Richemont’s unexpectedly strong earnings and Inditex’s push to scale its low-cost Lefties brand to rival Shein. Later, Parisi sits down with Stephen and Erica Malbon, co-founders of Malbon Golf, to discuss how they’re redefining golf fashion for a new generation — highlighting how moments like Jason Day’s “too distracting” vest incident, which only fueled the brand’s popularity.

Read on Glossy
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