What Does “Made in America” Luxury Really Look Like?


Diana Verde Nieto | March 20, 2017

What does home-grown, made-in-the-USA, all-American luxury mean? It’s perhaps easier, when thinking of luxury, to think of Europe - a Swiss-made watch carries a certain cachet, for example. As does perfume and lingerie produced in France, or British wool, German cars, or Scottish whiskies.

Instead, the U.S. has for a long time been synonymous with over-consumption, from Black Friday to stack ‘em high, sell ‘em low mass production. Its luxury brands do enjoy well-deserved recognition – for example, Tiffany & Co. and Ralph Lauren – but these companies rely on other countries to source staff and materials, and to manufacture and distribute their goods. Their processes are not 100% American.

But President Trump made ‘buy American’ a campaign issue, and suggests choosing American brands is signifier of patriotism and loyalty. Under his ‘America First’ policy, the new President has urged shoppers and businesses to “buy American and hire American.”

This is easier said than done. Choosing where to purchase your materials and establish your supply chain is always a challenge for any luxury business. The impact on the bottom line of choosing to manufacture in Los Angeles, say, over China is often simply too high for most firms to ignore.

The cost is also likely to get higher, after the number of U.S. garment factories fell 58.2% between 2000 and 2014, according to the U.S. Census Bureau. The American Apparel & Footwear Association says that just 3% of clothing items sold in the US are made domestically in 2017, compared with around 46% in 1997.

And while U.S. citizens may have liked Trump’s rhetoric at the ballot boxes, it doesn’t necessarily mean that it will influence their spending decisions. A 2016 AP-GFK poll found that while three in four say they would like to buy goods manufactured inside the United States, those items are often too costly or difficult to find.  Just 9% said that they only buy American.

Asked to choose between a theoretical $50 pair of trousers made abroad, or an $85 identical pair made in the United States, 67% said they would purchase the cheaper pair. Tellingly for the luxury market, people in higher earning households earning more than $100,000 a year were no less likely than lower-income Americans to say they’d pick the cheaper option. Everyone loves a bargain, it seems.

To counteract this, luxury U.S. companies will have to work hard to show why it’s worth investing in US-made product. Luxury customers generally like to know how their product was made, where it came from and the materials that were used. If businesses can get the storytelling around that right, they may do well in the current climate: luxury customers are used to and often happy to pay a premium for provenance.

"The messages sent out on the AW17 catwalks at New York Fashion Week were largely anti-Trump, pro-inclusiveness and pro-women."

But Trump’s made-in-the-USA policy may fail before it’s even started when it comes to the luxury market. Many luxury firms, particularly those in the fashion industry, are working hard to disassociate themselves from Trump and his pro-US stance altogether. Fashion by its very nature is forward looking and constantly evolving, and the messages sent out on the AW17 catwalks at New York Fashion Week were largely anti-Trump, pro-inclusiveness and pro-women. They had a global, progressive feel: the opposite of Trump’s domestic, conservative values.

Beyond fashion week, major firms are making statements that suggest the U.S. luxury retail industry isn’t wholly behind Trump, either. Luxury department store chain Nordstrom dropped Trump’s daughter Ivanka Trump’s fashion line in February. In a statement, the $14.4 billion business cited poor sales for the decision.

In his inaugural address, Trump promised U.S. industry would "bring back our jobs. We will bring back our borders. We will bring back our wealth, and we will bring back our dreams." It’s a big promise, and one that will need the backing of the U.S. luxury industry, among many other major industries, if it is to succeed in the long-term. U.S. luxury businesses that choose to adhere to Trump’s made-in-the-USA principle will have a lot of number-crunching, and presumably price hikes, to do. They will also have to clearly demonstrate what an American-made item has to offer above and beyond one made abroad - and carve out a very specific story of what American luxury truly is - if they are to win customers over to this vision, too.