The consumer looking to purchase luxury goods sourced from China may need to look elsewhere until the trade war between the US and China calms down.

Approximately 5000 products in the luxury goods sector were subject to a 10% tariff in late September, according to a Marketwatch.comarticle. The tariff was due to increase to 25% in January. However, during the recent G20 talks held in Argentina, US President Donald Trump and Chinese President Xi Jinping agreed to halt the new tariffs for 90 days while they negotiate further, according to a White House statement. Luxury products include handbags, leather accessories, mink furs, silk, goldleaf, handmade lace, as well as fabrics used in ballet, the opera and theatre, according to the article.

The Bluebell Group, a distributor of luxury goods throughout Asia, has started to feel the impact of the trade war-induced tariffs in their business, according to Ashley Micklewright, President & CEO of Bluebell Group. “The US-China trade war is already having an impact on consumer spending in the luxury retail industry across China with uncertainty slowing the pace of investment and consumption. Falls across the sectors have been more noticeable in recent weeks, also reflected by the falling values of local stock markets,” Micklewright explained.

According to a 2017 McKinsey report, the number of millionaires in China is expected to be the largest of any nation in the world by 2018. Chinese luxury consumers spend $7.4 billion per year,which represents nearly one-third of global luxury market spending, according to the McKinsey report.

“The slowdown has been most measurable in Hong Kong, with brands and stores dependent on Mainland Chinese consumers experiencing a material decline in sales. At the other end of the spectrum, sales at brands reliant on local Hong Kong consumers are unaffected. We also anticipate measures to crack down on the ‘daigou’ to have an impact in 2019,”Micklewright said. Daigou is the term used to describe how Chinese shoppers send goods back home from overseas.

Other Asian markets aren’t going to take as big of a hit, The Bluebell Group hypothesises. There has been a slowdown in the economy in Korea “due to less China-bound exports, dampening local confidence. However, we anticipate little impact on the Korean Duty-Free market due to loosening of visa restrictions by Beijing, which should offsetthe drop-in spending,” Micklewright explained.

The Japanese luxury market is expected to be unaffected by the tariffs. “We expect almost zero impact as it is largely isolated from these measures,” Micklewright said about the Japanese market. However, in some markets,there may even be a positive effect as a result of the trade war. In Taiwan,“the local retail market has also been picking up steam in 2018,” Micklewright explained. The effects are expected to be positive “due to the pro-Beijing results in the recent election,” Micklewright said.

Meanwhile, in Southeast Asia, Malaysia is expected to see both negative and positive impacts, according to the Bluebell Group. “Malaysia will see a negative impact due to akey reliance on exports to China, especially in manufacturing components, which are in turn re-used in Chinese exports. On the plus side, Malaysia is able to increase exports to the US which may offset some of the losses, but overall, we have little concern of any major effect on the retail sector as it is not highly dependent on Mainland Chinese tourists. In Singapore, we anticipate very little impact too as the city-state is less dependent on manufacturing and Mainland Chinese consumers, except potentially at Marina Bay Sands,” Micklewright said.

Luxury goods are a mainstay of the airfreight sector and there are indications that the decline in demand for these high-end products is starting to impact air cargo volumes.

According to a new report published by the International Air Transport Association (IATA) growth in demand for airfreight in 2018 will be at its slowest pace since 2016. The organisation also forecasts a 3.7% annual increase to 65.9 million tonnes in 2019, compared to the 4.1% increase it forecasted for 2018.

Meanwhile, one of Europe’s largest cargo hubs, Frankfurt Airport, saw throughput (airfreight andairmail) decline by 2.1% in November in the face of growing uncertainty over global trade.