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By Mandy Taheri
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President Donald Trump's proposed 200 percent tariff on all European Union (EU) alcohol products could deliver a significant financial blow to the French luxury conglomerate LVMH, led by billionaire Bernard Arnault, who attended Trump's presidential inauguration earlier this year and has been vocal in opposing French tax hikes.
Newsweek has reached out to LVMH's press team for comment via email on Thursday.
Why It Matters
The U.S. is one of the largest importers of French wine and spirits, and several LVMH-owned alcohol brands, especially those producing Champagnes, are widely popular in the states. Arnault and Trump have maintained a longstanding cordial relationship, but if enacted, the proposed tariffs could deal a significant financial blow to LVMH.
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Trump has continued to impose tariffs on various goods worldwide, even in the face of longstanding personal, diplomatic and trade relations, best exemplified by the notably strained U.S.-Canada relationship following a series of tariffs.
What To Know
LVMH, the luxury goods conglomerate formed through the merger of Louis Vuitton and Moët Hennessy, is led by Arnault, one of the richest people in the world. Moët Hennessy is the wines and spirits division of the company, which is well-known for its prestigious Champagne labels, including Dom Perignon, along with cognac and fine wines.
Arnault has a long-standing relationship with Trump, having first met back in the 1980s. He has been invited to the Trump Tower several times, paying the then-newly elected president a visit in 2017. Arnault attended Trump's first state dinner and in 2019, Trump visited Arnault and several executives at the opening of a Louis Vuitton factory in Texas.
First Lady Melanie Trump often wears Dior, an LVMH brand, for her public appearances, having notably worn the French fashion label to Trump's joint congressional address earlier this month.
In January, Arnault and his wife, Hélène Mercier-Arnault, and two of his children, Delphine and Alexandre Arnault, all attended Trump's inauguration, sitting alongside tech giants Elon Musk and Mark Zuckerberg.
Speculation arose that Arnault's attendance was a strategic move to mitigate potential tariffs on LVMH's luxury products, which span major fashion houses such as Louis Vuitton, Givenchy, Dior, Fendi, and Celine, as well as its high-end alcohol brands.
Shortly after his appearance, Arnault criticized France's tax hike on manufacturers while praising Trump's pro-business policies. "I've just come back from the USA and I could see the wind of optimism reigning in that country. And when you come back to France, it's a bit of a cold shower," Arnault said, according to Politico.
He also indicated that he was considering expanding LVMH's manufacturing presence in the U.S. to sidestep France's challenging economic climate and better navigate potential tariffs.
...
On Thursday morning, Trump threatened the EU, which he called "one of the most hostile and abusive taxing and tariffing authorities in the World," with a 200 percent tariff on all "WINES, CHAMPAGNES, & ALCOHOLIC PRODUCTS COMING OUT OF FRANCE AND OTHER E.U. REPRESENTED COUNTRIES."
He added: "This will be great for the Wine and Champagne businesses in the U.S."
Often thought of as gold-colored, bubbly, luxurious alcohol, Champagne is actually a sparkling wine exclusively produced in France's Champagne region. Protected by Appellation d'Origine Contrôlée (AOC) regulations, only wines from this region can legally bear the name "Champagne," with American counterparts referred to as sparkling wine.
Trump's move would ostensibly be a direct hit on LVMH's alcohol business, which generates billions in revenue for the company each year. Already in 2028 the business saw revenues dip.
LVMH wine and spirits division's revenue fell 11 percent in 2024, with the company reporting that its alcohol sector generated around $6.35 billion last year. Cognac and spirits fell the most, with sales down 14 percent, with champagne and wine revenue dropping 8 percent.
Tariffs are taxes on imported goods, typically paid by the importing businesses, which can then pass costs onto consumers through higher prices. The importing business could be any American company that purchases goods from foreign suppliers and brings them into the country for resale, manufacturing, or distribution. Tariffs are often used to protect domestic industries by making foreign goods more expensive and encouraging consumers to buy locally.
Potential tariffs on French alcohol products could drive American consumers to favor domestically produced wines, and further drop LVMH sales.
Notably, the president's son, Eric Trump, runs a family-branded winery in Virginia. Trump Winery encompasses 1,300 acres in Charlottesville, Virginia.
What People Are Saying
Ursula von der Leyen, President of the European Commission said on Tuesday in relation to new U.S. tariffs on EU Steel and aluminum imports: "Tariffs are taxes. They are bad for business, and even worse for consumers. These tariffs are disrupting supply chains. They bring uncertainty for the economy. Jobs are at stake. Prices will go up. In Europe and in the United States. The European Union must act to protect consumers and business."
Speaking shortly after Trump's post on Truth Social, U.S. Commerce Secretary Howard Lutnick said on Bloomberg TV that the president is responding "with strength and with power" to retaliation by trade partners such as the EU.
What Happens Next?
Trump imposed 25 percent tariffs on EU steel and aluminum on Tuesday. The EU retaliated with its own tariffs on $28 billion of American goods due to come in on April 1.
The Trump administration plans to impose more tariffs across the world on April 2.
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