Bernard Arnault courts Trump to shield LVMH from European tariffs

Summary

Bernard Arnault is orchestrating a sophisticated play to shield LVMH from Trump's threatened tariffs by leveraging decades of personal relationship-building and strategic US investments — a gambit that has already proven effective once and is now being deployed at scale.

The luxury conglomerate's exposure is enormous. The US is LVMH's largest market, equal in size to all of Europe combined. Trump has called the EU's trade surplus with America an "atrocity," but he governs through personal relationships. Arnault, who first met Trump in the early 1980s at a charity dinner at the Plaza Hotel when both were real estate developers in Manhattan, has made sure to stay visible: he attended Trump's inauguration in February 2025 seated next to Bezos and Musk, flanked by his wife and two of his five children.

The family ties run deeper. Arnault's second eldest son, Alexander, has become close with Jared Kushner. His daughter Delphine, who runs Dior, is friends with Ivanka Trump and supplies her with clothes. The LVMH conglomerate even pays rent to the Trump Organization, which owns the landlord for Louis Vuitton's Midtown store.

The playbook from Trump's first term

During Trump's first administration, Arnault announced a $50 million investment in a new Louis Vuitton "workshop" in Johnson County, Texas, with plans to hire 1,000 employees within five years. The timing was strategic: he made the announcement the day before the Trump administration was set to enforce tariffs on $7.5 billion in European goods. The tariffs hit aircraft, cheese, wine, and scotch—but spared luxury items like champagne and handbags. When asked why, Trump said plainly: "I can't tax him because he moved to the United States. He was very smart. He was way ahead."

The Texas facility produces bags bearing "Made in USA" labels, including the Neverfull, Speedy, and Metis. This move accomplished two things: it signaled to Trump that LVMH was investing in American manufacturing and jobs, and it created an argument for exemption that Trump could defend publicly. The strategy worked.

Positioning for round two

Arnault is now repeating and expanding this approach. Days after pulling Trump aside at the inauguration and confiding plans for "major investment in The United States," LVMH announced a bid for Tiffany & Co. for $16.2 billion. Tiffany is America's flagship luxury jewelry brand—one of the few iconic American luxury names left. Acquiring it gives Arnault both a genuine American asset to point to and a reason to argue that tariffs would harm US employment at a company he now owns.

The Trump administration has not yet detailed which tariff rates will apply to which goods, but LVMH executives are already mapping exposure. They are tracking exports across every customs code category and monitoring the exact location of shipments in the supply chain so the company can quickly assess its position the moment tariffs take effect.

The drinks division—Moët Hennessy—presents a sharper problem. Alcoholic beverages face thinner profit margins than leather goods and fashion, making them less able to absorb tariffs. Champagne and cognac cannot legally be produced outside France; the terms are legally protected by region. LVMH cannot shift production. It can only hope Arnault's relationship with Trump continues to shield the category, or it absorbs the cost.

Alexander Arnault, who was dispatched to New York in January 2021 (the day of the Capitol riot) to become number two at Tiffany, has now been moved to run Moët Hennessy's operations. The positioning suggests he is being groomed to eventually lead the drinks division—a crucial training ground if he is to eventually take the top job at LVMH.

The china complication

LVMH also faces pressure from a different direction. Sales in Asia Pacific, including China, declined 30% in 2024. China was LVMH's second-largest market and a critical growth engine for luxury conglomerates over the past decade. The decline tracks closely with Apple's near-double-digit sales drop in China, itself a reflection of weakened consumer demand and rising domestic competition from Chinese luxury brands. LVMH is now banking on sustained US demand to power growth.

The political dimension

Louis Vuitton's artistic director for women's collections, Nicolas Gasquière, posted on Instagram opposing the political associations, writing: "Standing against any political action, I am a fashion designer refusing this association." Some LVMH employees are uncomfortable with the alignment. But Arnault's strategy depends on exactly this kind of personal and political positioning. He left France in the early 1980s after François Mitterrand's election as the first socialist president of France's modern era, citing higher taxes and nationalization of swaths of the economy. He is now using a Republican administration's focus on personal relationships and pro-business signaling to protect his empire from trade friction.

The calculus is clear: luxury goods are inelastic. A tariff on Louis Vuitton bags raises prices and makes them more exclusive, but demand does not collapse. LVMH can pass costs through or absorb them with minimal margin pressure—unlike tariffs on cheaper consumer goods or commodities. Arnault has already demonstrated that Trump will negotiate away tariffs for companies that invest in the US and remind him of the deal structure regularly. The question is whether that relationship holds if the EU retaliates or if other American industries demand equal treatment.