On April 9, Donald Trump reeled in his attack on the global trade system, ordering a ninety-day pause on the steep “reciprocal tariffs” announced one week prior. Targeting many of the United States’ leading trading partners, the so-called “liberation day” tariffs threw financial markets into mayhem and was the object of rare criticism from right-wing billionaires and congressional Republicans alike. Stock markets recovered a major chunk of their losses following Trump’s apparent retreat, as corporate boards and fund managers breathe a temporary sigh of collective relief.
Not the least of them was the luxury goods industry. If Trumponomics has long been about reshuffling the decks between “losers” and “winners,” then the US administration’s salvo against globalization seems to bode particularly poorly for the world of luxury.
Intimately embedded in global trade flows, the luxury sector is dominated by a handful of European conglomerates that make a significant share of revenues from sales in the United States and abroad. France’s Moët Hennessy Louis Vuitton (LVMH), the largest holding in the sector, drew roughly a quarter of its 2024 revenue from the United States alone. LVMH, alongside its competitor groups Kering and Hermès, have been among the leading losers in the post–“Liberation Day” rout on France’s CAC 40 stock index. In just the last month, LVMH and Kering are down some 19 and 23 percent, respectively, compared to a roughly 10 percent falloff for the French stock index.
Even before Trump’s latest tariff escalation, the luxury industry was struggling to recover from a dip in spending, as high-end consumers cooled off from the wave of purchasing seen during the COVID-19 pandemic. Having previously expected a 5 percent recovery in revenues in 2025, financial analyst Bernstein now estimates that the industry could suffer a further 2 percent drop. In its first quarter earnings report released on April 14, LVMH announced a 3 percent decline in group-wide sales in the first three months of the year relative to the same period in 2024. On Tuesday, the total market value of rival group Hermès even surpassed that of LVMH, whose wider, premium middle-class consumer base and brand diversification make it potentially more exposed to the shock of a trade war.
The threats to luxury come despite the industry’s best efforts to stay out of harm’s way.
Few European businessmen have put more energy into weathering trade tensions with the United States than Bernard Arnault. Sometimes listed as the wealthiest person in the world, Arnault is the longtime patriarch of LVMH, which figures among the largest European groups by market capitalization. With a vast portfolio ranging from Givenchy and Sephora to TAG Heuer and Bulgari, the group’s brands circumscribe the global market for luxury and premium retail.
In response to Trump’s threats to remake global trade, Arnault has painstakingly nurtured his long-running connections with the Trump world, leveraging family ties and making key investments to stay on the nice list of the irascible American president.
Arnault is not a household name outside of France, so you may not have noticed the scrawny, seventy-six-year-old Frenchman lingering a few rows behind the inauguration podium in the Capitol Rotunda this past January 20. Arnault — alongside Delphine and Alexandre, two of his five children — was among the business grandees invited to bear witness to Trump’s return to power. Sitting a handful of rows behind the Clintons and Bidens, the members of the Arnault clan were also careful to join in for several rounds of choreographed applause.
Arnault has preferred to keep a positive face despite the imminent danger of a trade war, telling shareholders in late January about the “wind of optimism” overtaking the United States thanks to Trump’s reelection. Instead, Arnault has been more inclined as of late to take out his ire on the French political scene, lashing out against talk of tax increases in his home country, buckling under high public deficits. The February 1 issue of Le Monde that included a spread on Arnault’s recent political adventurism also featured a full-page LVMH advertisement, with an itemized list of the company’s contributions to France.
“Artist” and “Visionary”
But the real threat for Arnault is from across the Atlantic. The owner of LVMH has been building a modus operandi with Trump since before the Republican president’s first term. Capitalizing on a relationship stretching back to the late 1980s, Arnault was able to clinch a meeting at Trump Tower with then president-elect Trump in early January 2017. The luxury industry’s stance toward the controversial new chief of the White House was not yet staked out: for example, the owner of Kering — Gucci, Yves Saint Laurent, Balenciaga — François-Henri Pinault, voiced opposition to Trump’s so-called “Muslim ban.”
Arnault opted for a more transactional approach. Knowing Trump’s fondness for brick-and-mortar investments in the United States, LVMH opened a new Louis Vuitton production facility in Alvarado, Texas, in 2019. Joining Arnault for the ribbon-cutting ceremony that October, Trump offered warm praise for the French billionaire, whom he called an “artist” and a “visionary.” Arnault announced this January that LVMH was “seriously considering” expanding US production. On April 10, Reuters reported that the Alvarado plant is one of LVMH’s “worst-performing” production sites.
But investment in the United States is as much about buying political cover as it is about a single site’s bottom line. LVMH was spared from tariffs during an October 2019 US–European Union trade spat over subsidies for European airplane maker Airbus.
On the 2019 Texas trip, Arnault also reportedly tested the waters with the US president about making a sizable acquisition in the American market. At the time, LVMH had begun purchase talks with legacy American jeweler Tiffany & Co., which when completed in 2021 to the tune of $15.8 billion would be considered the largest luxury industry buyout in history.
It was the template for Arnault’s efforts to Trump-proof his business empire. During the renovations of Louis Vuitton’s flagship location in New York (that garish pile of faux luggage on 5th Avenue is covering the worksite), the company is renting a Trump Organization property across 57th Street to house its temporary store. To manage relations within the beltway, LVMH has worked with the S-3 Group, a corporate lobbying agency traditionally associated with the Republican party.
A key player in Arnault’s US strategy has been his son, Alexandre, who became a vice president at Tiffany’s in 2021. Alexandre and his wife were hosted by the Trumps at Mar-a-Lago in February 2023, a few months after Trump announced his reelection bid. Close with Trump’s son-in-law Jared Kushner — whose father, Charles, has been nominated as ambassador to Paris — the young Arnault was also present at Trump’s Madison Square Garden rally in late October of last year, weeks before his selection to lead LVMH’s alcohol division.
That could prove a timely redeployment if Alexandre is able to take advantage of his connections in Trump’s inner circle to avert the threat of any future trade escalation.
Before this week’s pause on Trump’s “reciprocal tariffs,” the fear was that the European reply would escalate the standoff into a full-fledged trade war. Now delayed to allow for negotiations between the European Commission and the White House, the EU’s response has been the object of aggressive lobbying by member states and industries eager not to get dragged further into the trans-Atlantic crossfire. When Europe moved toward slapping a 50 percent tariff on US whisky last month — in retaliation to the White House’s announcement of tariffs on European steel and aluminum — Trump lashed back on Truth Social, threatening “200% tariffs on all WINES, CHAMPAGNES, & ALCOHOLIC PRODUCTS COMING OUT OF FRANCE AND OTHER E.U. REPRESENTED COUNTRIES.”
On March 26, Arnault again visited the White House to discuss the brewing trade tensions, according to French weekly Le Canard Enchainé. All while downplaying the significance of LVMH’s direct line to Trump administration, French budget minister Amélie de Montchalin sought to rein in the luxury group’s executive, urging that “today, in the hostile world that we find ourselves in, we need to stick together as a group, as France and as Europe.” (French president Emmanuel Macron has called for a halt in US investments by French and European corporations.)
But targeted tariffs of the magnitude alluded to by Trump would likely mark a death sentence in the US market for LVMH’s line of alcohol brands. Unsurprisingly, the French government was also quick to come out in opposition to any EU levies on American whiskey. On April 7, the European Commission announced that any retaliation would not include new levies on US alcohol, yielding to pressure from France and Italy.
Betting on the Wealthy
The real dangers for a group like LVMH still lie ahead, but it’s just as difficult to imagine the luxury industry not adapting. The sector’s greatest strength is in the market it has cornered: that chunk of the global population with the disposable income to absorb tariff-induced price increases. If they get caught in any resumption of trade tensions, LVMH and its competitors would also look to offset a drop-off in US purchases with an increase in spending by wealthy US tourists traveling abroad.
The luxury market is also chronically uninviting to newcomers, with few US brands able to match the scale and legacy of their French or Italian counterparts. Then there’s the “Veblen” effect: a Hermès scarf, a Fendi handbag, or a bottle of fine cognac are desirable in large part because of their perceived scarcity, best measured in prohibitive prices.
In February, one industry consultant told me what he considered the luxury world’s ultimate advantage: time. Since his first investments into the newly created LVMH group in the late 1980s, Arnault has expanded the holding into a vast conglomerate of brands catering to the top of the global income and wealth spectrum.
It has been a successful strategy — and is designed to outlast the difficult periods. He had appeared sporadically before then, but Arnault really cemented his place in the top rung of Forbes’s billionaire rankings in the mid-2010s, cashing in as the concentration of wealth at the top of global society took on truly astronomical proportions. In recent years, Arnault’s fortune is something of a stubborn outlier on those lists, increasingly dominated by the mastodons of the tech boom. Through all the coming turmoil in global capitalism, it’s probably still safe to bet on the wealthy.