Donald Trump gave LVMH’s billionaire chief executive Bernard Arnault a pumping handshake as they exited the lifts in the gold and marble lobby of Trump Tower in Manhattan.
“One of the great men, Mr Arnault,” said Trump — then president-elect for the first time around — as they wrapped up the January 2017 meeting. “They’re [LVMH] going to do some wonderful things in this country. Jobs. A lot of jobs.”
The world’s biggest luxury group obliged. In 2019, Trump attended the opening of Louis Vuitton’s Texan factory, its second on US soil, where he declared that Arnault had “really delivered”, especially as some products would bear “Made in the USA” labels.
Eight years on, that relationship may prove an advantage for LVMH as the threat of tariffs looms large. The second Trump administration has threatened to levy across-the-board tariffs of up to 20 per cent on exports from Europe while China risks being much harder hit.
Such a move risks hitting the luxury industry, which exports the vast majority of its products from France and Italy, hard in what is its biggest market.
The US accounted for some €86bn in luxury goods sales in both 2023 and 2024, according to estimates from Bain and luxury association Altagamma. Last year, the US accounted for 25 per cent of LVMH’s €86.2bn in revenues. Meanwhile, North American sales accounted for 23 per cent of Gucci-owner Kering’s sales and the Americas as a whole about 19 per cent for Hermès in the same period.
Any upheaval would come at a particularly tricky time for the sector as it navigates weak demand in former growth engine China and from affluent but not super-wealthy shoppers in the west.
“We’re in uncharted territory,” said one person who advises companies on transatlantic relationships, who added that if the second Trump administration operates like the first they will “come up with a list that hits things they want to hit, and take care of people they don’t want to mess with”.
Yet Trump’s first stint in the Oval Office indicates that the gap between rhetoric and practice can be wide. Scott Bessent, Trump’s pick for Treasury secretary, has already described the proposed tariffs as a “maximalist position” — in other words, a starting point for negotiation with trading partners.
The expectation is the administration will have a “sliding scale” approach to tariffs, according to advisers close to luxury groups with knowledge of the situation.
“I think everyone’s figuring out that if they just get to the big man, aka Trump, it all works . . . if you’re the last person who spoke to him, that’s what he thinks,” the adviser said.
The first line of defence is lobbying. In addition to Arnault’s own relationship with the incoming president — whom he has known since his New York real estate days in the 1980s — his son Alexandre has met with Trump on several occasions in recent years, including on visits to Mar-a-Lago while he worked as an executive at Tiffany & Co in the US.
LVMH has also conducted a high-profile revamp of Tiffany’s flagship Manhattan store after acquiring the US jeweller in 2021, in the sort of glamorous redevelopment project Trump personally likes.
“With Trump, it’s big man to big man, [so] Arnault will work that personal relationship,” the adviser added.
LVMH has also spent $1.9mn on lobbying efforts in Washington since 2018, largely with S-3 Group, according to federal filings tracking lobbyist fees and company reports. According to people with knowledge of the relationship, they have worked in particular with Martin Delgado, a well-connected DC lobbyist and Republican donor.
Government filings over the past two years show much of those efforts have been focused on advocating for Moët Hennessy, the group’s wines and spirits division, as it works to pre-empt tariffs there while boosting brands hit by a slowdown in US sales. In 2019, Trump placed 25 per cent levies on many European food and beverage exports in retaliation for EU support for Airbus.
Meanwhile Kering, also the owner of Saint Laurent and Bottega Veneta, spent $60,000 annually from 2015 to 2021 on lobbying with Capitol Knowledge, but stopped after 2022, according to government filings.
Chief executive François-Henri Pinault hinted at criticism of Trump’s immigration policies when he posted on social media about the need for tolerance and diversity at the height of outrage over Trump’s attempts to ban travellers from a number of Muslim countries, without explicitly naming the president. His wife, the actor Salma Hayek, was a prominent supporter of Democratic candidate Kamala Harris. “Pinault is behind the eight ball” — or currently more on the back foot — according to the adviser.
Elsewhere, privately held Chanel has spent more than $240,000 on lobbying since 2019, according to filings. Meanwhile, Pernod Ricard has also ramped up lobby spending since Trump’s first term in office, spending more than $8mn since 2017 as it pushed to pre-empt any trade issues on wine and spirits exports.
The drinks company has been a client of Miller Strategies, among others, whose founder Jeff Miller is a top GOP lobbyist close to the Trumps and especially Don Jr, according to US lawyers and political advisers.
LVMH, Kering, Chanel and Pernod Ricard declined to comment. Delgado, S-3, Miller Strategies and Capitol Knowledge did not respond to requests for comment.
The individual impact for companies should tariffs be imposed would depend on whether they try to pass on any cost increases to customers and how exposed they are to more price sensitive middle classes.
“Will someone buying an Hermès Kelly hold back because the price has gone up 15 per cent? Probably not,” said one person close to several French luxury groups, referring to a handbag whose entry level price is about $10,000. “If you’re selling to aspirational clients, it’s a different thing.”
Steep price rises by most luxury brands since 2019 limits their ability to increase them further, with prices of some Chanel and Dior bags up by more than 50 per cent between 2020 and 2023, according to Bernstein.
Claudia D’Arpizio, a partner at Bain, said it would be “impossible . . . to keep increasing prices by 20 per cent” every year, but did note that luxury products are to some degree shielded in comparison with other consumer goods, given there are “no real substitutions among US products”.
The most drastic option, should substantial levies come to pass, would be shifting some manufacturing to the US, but the options for many groups are limited. Besides taking years to achieve, moving production to any significant degree risks damaging brand equity in an industry that justifies its high prices by touting the cachet and quality of products made in France and Italy.
They would also face challenges in doing so, added D’Arpizio. “The skills do not exist outside Italy or France”.
Some companies, such as Cartier-owner Richemont, have said they have no plans to move production to the US. Meanwhile, a plan to try bottling LVMH-owned Hennessy cognac in China in order to bypass tariff restrictions there was met with worker strikes last month, leading the company to drop it.
For smaller brands, increased tariffs would probably lead to focusing on other markets outside the US, or looking at options to ship in unfinished components that can be assembled in country, according to luxury supply chain specialist Dorcas Payne. But the ability to do that for leather goods and accessories is limited.
In the short term, sales could get a boost from “a feel good factor” among rich Americans happy about Trump’s victory and promised policies such as tax cuts, according to Jean Danjou, analyst at Oddo BHF.
But he warned that even tariffs targeting China, say, and not Europe pose a risk. “My biggest concern is that a trade war would be negative for global growth, especially for China, hitting overall consumption of luxury goods,” he said.
Analysts and executives believe any tariff impact would be mitigated by shopping by American tourists, who already buy a lot in Europe, ramping up their spending — especially if the dollar remains strong.
“Many luxury executives do not think they will be targeted by Trump’s tariffs,” said Danjou. “But without clarity on what he’s going to do on the levies, it’s difficult to formulate a clear point of view.”
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