Amid the announcement of tariffs on products imported from the European Union (EU) by President Donald Trump, the chairman of the French luxury group Louis Vuitton Moët Hennessy (LVMH) is taking steps to avoid tariff risks by leveraging his relationship with President Trump.
According to The Wall Street Journal (WSJ) on the 19th (local time), Chairman Bernard Arnault is mobilizing lobbyists in Washington to emphasize that the European luxury industry is not the cause of trade disputes, seeking to have his company's products excluded from the tariff list. WSJ reported, "Chairman Arnault has positioned his 32-year-old son Alexandre in key roles at LVMH to solidify ties with Trump and his family."
The reason Chairman Arnault is focusing on tariff issues is that the U.S. market is one of LVMH's key revenue sources. LVMH's share of U.S. sales accounts for 27% of the group's total. In particular, as sales in China plummeted by about 20% last year, the U.S. has become an even more important growth engine. In such a situation, if tariffs are imposed, there is a high likelihood that luxury prices will rise, leading to reduced consumer spending and worsened performance.
Recently, President Trump noted, "We will impose tariffs on EU-made imported products soon," pointing out that while the U.S. imports automobiles, food, and agricultural products in large quantities from Europe, the EU does not purchase enough American-made cars and agricultural products. He also mentioned the possibility of tariffs on EU products on the 31st of last month.
In fact, there is a precedent for Chairman Arnault leveraging his relationship with President Trump to evade tariffs. When a $7.5 billion tariff was imposed on European aircraft, cheese, wine, and other goods during Trump’s first administration in 2019, luxury handbags were excluded from the list. According to WSJ, one day before this decision was announced, Arnault was with President Trump at the opening ceremony of a Louis Vuitton factory established in Texas. At that time, when President Trump was asked why champagne and leather products were excluded from the tariff list, he replied, "Because Arnault came to America," adding, "Because France's top entrepreneur invested in America."
The relationship between Chairman Arnault and President Trump began in the 1980s in New York. At that time, the two individuals developed their relationship as real estate developers. Later, when LVMH opened a Louis Vuitton store in downtown New York, they signed a lease with the Trump Group, and this relationship has continued. Additionally, Arnault's second son, Alexandre, is friends with Trump's son-in-law Jared Kushner, and Ivanka Trump is reportedly close friends with Arnault's daughter Delphine.
Chairman Arnault stated at an earnings announcement on the 28th of last month, "We are seriously considering ways to expand production in the U.S." Currently, LVMH operates 14 factories across the United States. However, there are also concerns regarding the limitations of relocating production lines to the U.S. due to the nature of the luxury goods industry. Products like champagne and cognac can only be produced in specific regions in France, and most luxury products are produced in Europe to maintain unique manufacturing techniques. Investors are paying close attention to whether Chairman Arnault's connections will protect the group from tariffs once again.