Escalating trade war between the US and China may result in growth slowdown for companies producing luxury goods, as some investors already turned away from the market stimulated by consumption in these two key countries, Reuters reports.

Recently shares of European companies dominating at luxury market, including LVMH and Kering (parent of Gucci), became favorites for investors and reached record high levels.

And although companies from luxury sector are not directly influenced by threat of growing protectionism unlike in case of auto producers and industrial companies, however, mutual exchange of tariffs puts them in risk zone. Implementation of duties may result in reduction of buying power of consumers in the US and China, which are the largest buyers of European luxury goods and provide for half of sector’s revenue.

UBS already included Italian Salvatore Ferragamo and British Burberry into risk zone.

Meanwhile, there is no obvious signs for concerns yet. Chinese demand for leather goods from Louis Vuitton grew in the second quarter compared with first one.

Experts note that in case of luxury goods, consumers are less sensitive to prices and might ignore tariffs application and their influence on prices.

European producers are closely watching the situation. They may start transferring some production to the US and China, especially since they are already operating factories in these countries.