And how Chinese and American Trade Wars Are Killing Luxury Brands and Experiences Globally

Photos: Al Arabiya & CNN

How viral TikToks and trade war tariffs are unraveling the myth of high-end pricing.

The seemingly impenetrable veil of luxury pricing has been dramatically torn away as Chinese manufacturers flood TikTok with videos exposing the true production costs of high-end products, all against the backdrop of an escalating US-China trade war.

Chinese manufacturers, long silent partners in the global luxury supply chain, have taken to social media platforms in an unprecedented wave to reveal what many suspected but few could confirm: the actual production costs of coveted luxury items are often a mere fraction of their retail prices. This digital rebellion comes at a critical moment as US-China trade tensions reach new heights, with Trump’s 145% tariffs on Chinese imports being met with Beijing’s retaliatory 125% duties, creating a perfect storm that threatens to fundamentally reshape the global luxury landscape.

The Digital Rebellion: TikTok as the Unlikely Battlefield

‘China has been here for 5000 years. Most of the time, there was no United States and we survived’ China analyst, Victor Gao, say that ‘China will fight to the very end’ in a trade war after President Trump hit China with 145% tariffs. Credit: c4news on TikTok
In what observers are calling “Trade War TikTok” or “Chinese Manufacturer-Tok,” suppliers are leveraging social media to pull back the curtain on the luxury industry, breaking down production processes, material costs, and offering direct-to-consumer sales that bypass traditional retail channels. These videos have garnered millions of views, particularly after April 2025 when tariff escalations intensified the online movement.

One of the most viral examples came from a now-defunct TikTok account called @senbags, where a man claiming to be a longtime supplier for European luxury brands provided an itemized breakdown of a Hermès Birkin bag’s production cost. According to his calculation, a Birkin that retails for $38,000 costs approximately $1,400 to manufacture using identical materials.

“More than 90% of the price is paid for its logo,” the manufacturer explained in his viral video. “But if you do not care about the logo, you just want the same quality, same material, you can just buy from us because for our bags we use exactly the same material, same leather, same hardware, same edge oil”.

Exposing the True Cost of Luxury: What’s Really in That Price Tag?

Breakdowns show many luxury leather bags cost around $180 to produce, despite retailing for $2,000 to $8,000, with materials often making up just a small portion of the total price. Photo: MSN
The revelations from Chinese suppliers have been both specific and systematic. One viral breakdown of the Hermès Birkin detailed each component’s cost:

Himalaya crocodile leather from HCP (France): $3,900 for three pieces
⁠Imported lambskin interior lining: $200
Premium thread: $25
Diamond-set hardware: $700
Coating oil from Stalia: $30
⁠Premium zippers from Riri and YKK: $350
⁠Expert artisan labor (30-year experienced craftsman): $700

Total production cost: Approximately $5,900 for a bag that retails for $66,000.

For standard leather luxury bags, the economics are even more stark. The materials typically account for only 10-20% of the retail price, according to industry analyses. A New York Times breakdown cited by Italic revealed that for a typical luxury handbag, the finest leather and materials cost around $60 (30% of manufacturing cost), while labor accounts for roughly $72 (40% of cost), hardware and logo another $45 (25%), and miscellaneous expenses about $9 (5%).

This means the total production cost for many luxury bags is approximately $180—whether the retail price is $2,000 or $8,000.

Strategic Exploitation of Trade Tensions

Lunasourcingchina revealed manufacturers behind Nike, Adidas, Fila, and New Balance. Credit: lunasourcingchina on TikTok
The timing of this TikTok phenomenon is hardly coincidental. While some accounts like @lunasourcingchina had been posting manufacturing insights since February 2025, the trend didn’t achieve widespread virality until mid-April 2025, directly following the major tariff escalations between the US and China.

On April 9, 2025, the United States hiked tariffs on Chinese goods to 145%, to which China responded by raising its own duties to 125% on April 11[9]. Within days, reposts of Chinese manufacturers’ TikTok videos went viral across social media platforms, particularly on X (formerly Twitter).

This coordinated digital strategy appears to serve multiple purposes: undermining Western luxury brands, highlighting China’s manufacturing capabilities, and encouraging consumers to circumvent traditional retail channels—and by extension, the tariffs imposed by their governments.

“The Chinese manufacturers just hit them with the UNO reverse,” commented one social media user, while another wrote, “I am loving how the Chinese are flooding TikTok with this information”.

Beyond Handbags: The Widespread Exposure

Chinese OEMs are exposing designer brands on TikTok revealing how little it actually costs to make luxury items. Now those same factories are cutting out the middleman and selling directly to consumers. Photo: circulorojo.mx
The revelations extend beyond just handbags. Another prominent account, @lunasourcingchina, which has garnered over 573,000 followers, has exposed production facilities for brands including Brooks Brothers, Tommy Hilfiger, Hugo Boss, and Lacoste.

In one particularly viral video from February 2025, @lunasourcingchina revealed that Lululemon’s popular yoga pants are manufactured at two OEM factories in Yiwu, China. She claimed that identical leggings, made from the same materials and of the same quality, could be purchased for just $5 to $6, compared to the much higher retail prices set by the brand.

“There’s nothing a Chinese factory can’t make!” proclaimed Luna in one of her videos. This sentiment has resonated with Western consumers, who are increasingly questioning the value proposition of luxury and premium brands.

The Economics of Luxury Pricing

Revealed costs show the Himalaya crocodile Birkin can be made for far less than retail, surprising consumers with its high markup. Photo: Daily Mail
The considerable gap between production costs and retail prices has long been understood within the industry, but the specific breakdowns provided by Chinese manufacturers have shocked many consumers. As one researcher noted, “The true cost of making this Himalaya crocodile Birkin with exactly the same material from the same supplier for those boutique bags by our factory is…”—dramatically lower than retail.

Experts in the luxury sector acknowledge that branding, marketing, and perceived exclusivity are the primary drivers of price, not production costs. A recent investigation into Dior’s handbag pricing revealed an even more extreme disparity: production costs of approximately ₹4,700 ($56) per handbag compared to a retail price of ₹2,00,000 ($2,400)—a markup of over 4,000%.

The luxury industry has cultivated this model for decades, with storied brands spending fortunes to equate their names with aspiration and exclusivity. The more successful they are in this endeavor, the more coveted—and expensive—their products become.

China’s Manufacturing Reality vs. Luxury Mythology

Watch on TikTok

Chinese distributors appearing on TikTok FYP amid the ongoing US-China tariff war. Credit: montu.sojoli on TikTok
One of the most significant revelations from this digital campaign is the contradiction between where luxury items are made and what brands tell consumers. While many European luxury houses emphasize their French or Italian craftsmanship, the videos suggest that a substantial portion of production actually happens in China before receiving “Made in Italy” or “Made in France” labels.

However, luxury brands like Hermès maintain different narratives. Hermès states on its website that “the company is committed to maintaining the majority of its production in France, through its 60 production and training sites”. This disconnect between brand messaging and manufacturing reality has fueled consumer skepticism.

The videos challenge the perception that Chinese manufacturing means poor quality, instead highlighting meticulous production processes and attention to detail. As one manufacturer explained, “We were the real OEM factory for those luxury brands. We are the same group of people, the same group of artisans who have been making the boutique bags for those luxury brands. We know how to make them real. We know how to make them good”.

Consumer Response: The Shifting Luxury Landscape

Following new U.S. tariffs, Chinese apps like DHgate surged in popularity as suppliers took to TikTok to explain luxury pricing—featuring items like the Himalaya crocodile Birkin. Credit: JessicaZ1018 on X.
The impact on consumer behavior has been swift and significant. Social media is flooded with comments from people who say they’re now making lists of Chinese manufacturers to buy directly from the source.

“Like I literally downloaded WhatsApp so I can place an order or two,” wrote one social media user. American TikToker @sydneiyaphit shared how he’s compiling a list of Chinese manufacturers so his followers can “buy directly from the source,” while @eveandvenus has already shared a comprehensive list of different suppliers and products.

This direct-to-consumer approach threatens the very foundation of luxury retail. Even with import duties and shipping costs, consumers find that purchasing directly from manufacturers offers substantial savings compared to buying branded products through traditional channels.

The Hidden Costs of Manufacturing in China

While the price differentials are dramatic, experts caution that there are additional considerations when sourcing from China that aren’t always visible in the initial price comparison. A study by Dewhurst and Meeker estimated that manufacturing in China can add approximately 24% in hidden costs beyond the quoted production price.

These include shipping and duty (estimated at $2,600 per container), land transport to and from ports (potentially doubling shipping costs to over $5,000), inventory carrying costs during the 4-6 week transit period, cargo insurance (with approximately 10,000 containers falling overboard annually), and travel expenses for business representatives to visit factories.

For companies, these considerations have always been part of the cost-benefit analysis of outsourcing. However, for individual consumers now being courted by Chinese manufacturers, these additional costs and potential risks remain largely unaddressed in the viral videos.

Strategic Implications for Luxury Brands

Reports suggest China may be allowing counterfeit production to pressure U.S. brands like Jimmy Choo during the tariff war—though many Chinese manufacturers stress they now offer unbranded goods made with the same materials, minus the logos. Photo: Retail Insider
For luxury brands, this digital insurrection represents an existential threat to their business model. The luxury industry has historically relied on information asymmetry—consumers had limited visibility into production costs and processes, allowing brands to maintain the narrative of exceptional craftsmanship justifying exceptional prices.

Industry analysts have warned that the exposure of luxury brand supply chains is prompting a reevaluation of consumer values. “As more individuals question the worth of luxury goods, the potential for a new kind of nationalism is emerging in China, with consumers increasingly favoring local brands that offer similar quality at lower prices”.

Jing Daily, a publication focused on luxury markets in China, noted that European and American luxury brands are now contending with “higher costs, supply chain disruptions, and changing consumer sentiment” as a result of the trade war. Some European luxury brands might actually benefit from the US-China trade tensions, as Chinese consumers shift away from American brands affected by the tariffs.

The Counterfeit Question

Adding another layer of complexity to this situation are allegations that China might be weaponizing counterfeits as part of its trade war strategy. China already accounts for an estimated 86% of the world’s counterfeits, according to the US Chamber of Commerce, representing around $818.4 billion of the global counterfeit trade.

French investigative outlet Glitz reported that China might be giving “free rein to counterfeiters, particularly those targeting US luxury brands in retaliation for Trump’s tariff war”. This strategy would particularly impact Western luxury brands such as Ralph Lauren, Tom Ford, Calvin Klein, Coach, Jimmy Choo, Estée Lauder, and La Mer.

However, there’s an important distinction between counterfeits and what many Chinese manufacturers are now offering: unbranded products made with the same materials and processes as the luxury items, but without the logos. As one manufacturer explained, “The only difference is one, we don’t have the logo, so we don’t have to pay so much amount of money just for that logo. And second, our human resource is much cheaper”.

Global Economic Implications

Chinese OEMs highlight their full in-house production as a key edge. Credit: lan.furniture6 on TikTok. User on X notes surge in Chinese manufacturers targeting U.S. buyers, with prices remaining lower than American retail even after tariffs and shipping. Photo: abby4thepeople on X
The current situation exemplifies how modern trade wars evolve beyond traditional government-to-government tariff exchanges. Social media has become an unexpected yet powerful battlefield, allowing manufacturers to communicate directly with consumers worldwide, potentially disrupting established supply chains and retail models.

For the US economy, this poses significant challenges. If American consumers increasingly purchase directly from Chinese manufacturers—even with higher tariffs—it could undermine both domestic retailers and the intended economic benefits of the tariffs themselves.

As one X user observed: “My feed is suddenly filled with Chinese manufacturers trying to sell directly to Americans. The gag is that even with paying the import tariff and shipping, it’s still way cheaper than buying the same products through American corporations. We are not winning this trade war”.

Conclusion: The Emperor’s New Clothes Moment for Luxury

This unprecedented transparency into luxury manufacturing represents a potential inflection point for the global luxury market. For decades, consumers have willingly participated in the luxury mythology—paying premium prices for the intangible value of brand heritage, exclusivity, and status. This system functioned as long as the curtain remained drawn between production and consumption.

Now, as Chinese manufacturers pull back that curtain, luxury consumers face a moment of reckoning: when a $38,000 bag costs $1,400 to make, or when $150 yoga pants can be had for $6, what exactly are they paying for?

For aspirational luxury consumers who save for months to afford entry-level luxury items, these revelations may be particularly disruptive. The knowledge that their hard-earned money is paying primarily for a logo—rather than exceptional materials or craftsmanship—challenges the fundamental value proposition of luxury goods.

For the ultra-wealthy who can afford the highest-end luxury products without financial strain, the question becomes philosophical rather than economic: does the value of luxury lie in the product itself, or in the social signaling that comes with recognizable branding?

As this digital rebellion continues to unfold, one thing is becoming increasingly clear: the traditional luxury business model built on mystique, opacity, and extreme markups is facing its most significant challenge yet. Whether luxury brands can adapt to this new era of radical transparency—or whether consumers will collectively rethink the value of that embossed logo—remains to be seen. But in exposing the true cost of luxury, Chinese manufacturers may have permanently altered how the world perceives those coveted designer labels.

In the words of one manufacturer who pulled back the curtain: “That’s because more than 90% of the price is paid for its logo. But if you do not care about the logo, you just want the same quality, same material, you can just buy from us.” Perhaps the ultimate luxury in today’s world is not the branded product itself, but the freedom to choose quality without paying the premium for perception.

Sources:
[1] Chinese Manufacturers Expose The Real Cost Birkin Bag
[2] China just exposed a ton of luxury brands in a TikTok FYP takeover
[3] Trade War 2.0: Will luxury brands survive the fallout?
[4] Welcome to the TikTok Economy
[5] The True Cost of Luxury: Dior’s Handbag Pricing Revealed
[6] Manufacturing in China? The true cost may surprise you
[7] Birkin bag for $1,400, Lululemon for $6: China’s clapback at Trump
[8] Chinese Manufacturers Expose Luxury Goods Costs Amid Trade War
[9] Chinese Manufacturers Exposing Luxury Brands
[10] China luxury market: Trade war impact minimal for now
[11] The Complete Guide to TikTok Marketing: Tips, Examples & Tools
[12] HOW MUCH A LUXURY HANDBAG REALLY COSTS…
[13] The true costs of sourcing from China
[14] Is China knocking down value of luxury brands America loves to buy?
[15] Decoding Luxury: Understanding Designer Handbag Pricing in 2024