Tariffs Are Coming for Coach — But Accessible Luxury Will Still Reign

Why iconic handbag brand Coach is built to weather increased tariffs

I originally discussed Coach’s brand and business success on my podcast, Meme Team. Listen to the full episode wherever you get your podcasts!

Coach used to benefit from a tariff loophole. Well, not just Coach; any American brand, really. Under U.S. trade law, the de minimis exemption allowed small shipments, or ones worth less than $800, enter the country without paying tariffs or going through a bunch of customs paperwork. Lots of brands, like Coach, structured their imports to take advantage.

But under the recent U.S. tariff reforms, that exemption will be gone, and import taxes will apply to all those products, no matter the shipment size. What this means for Coach is that they’ll bear an extra $53 million in 2026 alone. That, along with the new tariffs (especially on goods made in China) are raising costs further — Coach’s parent company Tapestry Inc estimates around $160 million in 2026.

Coach handbags, featuring the iconic Brooklyn bag and the Chain Tabby.

Coach now faces three choices:

• Raise prices → risk losing younger/price-sensitive customers.

• Eat the costs → protect customers but hurt profits.

• Cut costs elsewhere → streamline collections, reduce SKUs, or find cheaper supply chain solutions.

…or a mix of all three. Raising prices only slightly while cutting costs elsewhere. Coach CEO Todd Kahn foresees maybe a $10-15 increase per bag (not great, but at least it’s not hundreds of dollars). The tariffs will disproportionately affect sister company Kate Spade as the vast majority of its business is in the US. Those tariffs, coupled with declining sales, will see Kate Spade reducing its handbag inventory by one-third. Shares of parent company Tapestry fell about 14% after this news was announced.

But I have a feeling Coach will be just fine. In the most recent quarter, revenue rose 13%, excluding currency fluctuations. Kate Spade, on the other hand, saw revenue fall 13%. Coach remains in the top five hottest brands according to the closely-watched Lyst Index, where most of the top brands are European brands like Miu Miu, Loewe, and Saint Laurent. It’s only Coach and Ralph Lauren (number 11) that are the few US names on the list. Where more expensive luxury European brands (especially Saint Laurent) are known to raise prices regularly, Coach has been able to maintain accessible luxury with its price points. For its part, Kate Spade has struggled to resonate with younger consumers the way Coach has, and it will be seeing its own major brand overhaul.

Coach Resonates with a Particular Demographic

Coach has spent the past five years doubling down on a younger audience — the “timeless Gen Z” — which it has found has a bigger customer lifetime value. This is the cohort of people that have started their first job or gotten their first promotion, and they’re willing to spend a little bit more on a timeless or classic design.

Take the Tabby bag, sales of which began to slow in March 2020. Traditionally, Coach would have slowly removed the bag from full-price stores, marked it down, put it in outlets, and, a year or so later, introduce a bag with very similar attributes (“maybe called Gabby”) and the cycle would begin again.

“That fashion cycle becomes very detrimental to brands,” Kahn has said. “Instead of following that negative flywheel, we created a positive flywheel.” Coach kept the Tabby on shelves and in stock, AND in 2021, they introduced the Pillow Tabby, which quickly went viral on TikTok. That year, it topped the Google Hot 100 list. And now, the Tabby reigns as the modern-day Coach icon.

Photo: Jennifer Lopez with the Pillow Tabby (courtesy Coach)

This positive flywheel gave way to the 2023 launch of Coachtopia, the sustainable subbrand which uses leftover Coach materials in bold and funky designs — allowing the brand to launch trendy pieces while also doing its part to make sure Coach products never end up in a landfill. The other interesting thing this accomplishes is that it now competes with sister brand Kate Spade. For years, Tapestry never wanted Kate Spade and Coach to cross paths; they didn’t want to cannibalize each other’s customers. But what Coach found is that that overlap might only be 10%. In other words, even while Kate Spade and Coachtopia sell whimsical and funky designs, they have distinct enough customer bases for their sales to not hurt each other. At least that’s the current thinking.

But all that being said… there are times when Coach employees aren’t convinced by the data right away, where the art and science clash. One older team member was doubtful of the commercial potential for Coach’s Swing Zip bag, an archival style. But in their testing, they found Gen Z loved it. On the other side of that, the company’s more recent bestseller is the Brooklyn. Data would have shown that it wouldn’t have sold well; it has very little branding, the strap isn’t adjustable, and it’s not very functional inside. But people love that bag. It’s slouchy, casual, you can throw anything into it, and it has a beautiful silhouette. It’s an instance where the art of fashion — not data — wins.

But more than that, the Brooklyn story also shows why Coach may weather tariffs better than most. Even when the data says “no,” the brand’s instinct for what resonates with customers has been spot on. Pair that with viral hits like the Tabby, new lines like Coachtopia, overall more sustainable product cycles, and a willingness to experiment, and you get a company with pricing power and cultural cachet.

So while tariffs might add short-term pressure — a few extra dollars here, a few million in costs there — Coach has built a brand resilient enough to absorb the hit. The real risk isn’t that tariffs will break Coach, but that competitors without its cultural relevance and pricing power will stumble while Coach keeps growing.

Lots more on building timeless brands and effective business storytelling on my podcast, Meme Team. This week we also covered the backlash against GPT-5; and Taylor Swift's cultural impact. Listen to the full episode while you do your afternoon chores.