It came as a surprise to many: Bernard Arnault, CEO of the LVMH group, and several members of his family were present at the inauguration ceremony of the 47th President of the United States. They were the only Frenchmen present that day. As it happens, Bernard Arnault has a long-standing relationship with Donald Trump. Let's find out the origins of this relationship and how the two strategists stick together when it comes to doing business.
The initial meeting between Donald Trump and Bernard Arnault dates back to the 1980s, when Arnault moved to New York to escape François Mitterrand's socialist policies in France. Arnault, then an aspiring real estate tycoon, shared with Trump a common ambition in that sector. Their first interaction at a charity dinner at the Plaza Hotel marked the beginning of a relationship that would evolve over the decades.
Expansion strategies and investments
As CEO of LVMH, Bernard Arnault has always had an eye on the US market, which is crucial to the luxury conglomerate. To circumvent the threats of tariffs imposed by the Trump administration, Arnault has cleverly moved some of LVMH 's production to the US. The inauguration of a Louis Vuitton workshop in Texas in 2019, in the presence of Donald Trump, illustrates this strategy. This $50 million investment has created 1,000 jobs, reinforcing LVMH's image as a major economic player in the U.S. - even if compared to the 200,000 employees, it seems like a drop in the bucket.
Political influence and lobbying
The relationship between Arnault and Trump is not limited to business. Arnault was able to mobilize lobbyists in Washington to defend the interests of the European luxury goods industry. This political influence was crucial in preventing LVMH's flagship products, such as champagne and cognac, from being affected by U.S. tariffs. Indeed, despite the trade tensions between the US and Europe, these products were spared, which was seen as a strategic advantage for Arnault.
Strategic investments and acquisitions
LVMH's acquisition of Tiffany in 2021, for a record amount, is another example of how Arnault was able to leverage his relationship with Trump. The acquisition enabled LVMH to strengthen its presence in the US market, particularly in New York, where the group took control of several key locations. During the renovation of Tiffany's flagship store, LVMH even leased a building owned by Trump, strengthening the business ties between the two men.
The weight of the USA
Group sales have more than doubled in the USA over the last decade (2015-2024), rising from 9.35 to 21.55 billion euros and now accounting for around 25% of total sales.
The American market is strategic, as it is more dynamic than the Old Continent. The American consumer is a bigger spender, and the wealthiest people live in the USA.
Adapting to Trump's policies
Arnault's ability to navigate the American political landscape under Trump is remarkable. Despite threats of trade war, Arnault has adapted LVMH's strategy to minimize the impact of Trump's protectionist policies. By investing in production sites in the United States and strengthening ties with the Trump administration, Arnault has succeeded in protecting LVMH's economic interests.
With this 47th US presidency, the relationship between Arnault and Trump could continue to play a crucial role in LVMH's strategy. LVMH's ongoing investments in the U.S., notably in the beverage sector with Moët Hennessy, show that the group is ready to adapt to political and economic developments. Alexandre Arnault, son of Bernard Arnault, also plays a key role in this strategy, strengthening ties with Trump and preparing LVMH's future in the US market.
A strong dollar in the face of tariffs
Like its peers, LVMH shares have been buffeted by concerns about tariffs and the strength of the US dollar. In reality, these two forces are acting in opposition. Since the market incorporated Donald Trump's likely (since confirmed) victory in the US presidency last September, the dollar has strengthened (because that's what happened in 2018 during his first term when he ensured the greenback was strong). We can assume that the strong dollar will offset higher tariffs.
Segment-specific differences
Moreover, Donald Trump's policies are seen as positive for equities and wealth creation, and therefore by extension for luxury spending. However, some of the Group's segments, such as wines and spirits, are the business most exposed to potential tariffs, as these products are manufactured in Europe. Wines and spirits are probably among the most price-sensitive luxury products, and therefore present the greatest risk in terms of demand. The French group's other segments have a stronger presence in Uncle Sam's country, with 23 fashion and leather goods workshops located in the USA. Moreover, ¾ of American demand can be met locally. The watches and jewelry segment is driven by Tiffany, which accounts for half of sales, a large part of which are generated in the Americas. The other two segments will therefore be less affected.
In fact, at LVMH's latest quarterly results conference, Mr. Arnault responded to an analyst's question about the risks of tariffs in the United States: "And I've just come back from the United States, as you kindly mentioned. And I've seen the surge of optimism in the country. And after spending a few days in the States, you come back to France and it's a bit of a shock. It seems that in the United States, people welcome you with open arms. Taxes are going to drop to 15%. The workshops we can build in the U.S. are subsidized in quite a few states, and the U.S. President encourages this practice."
Through a combination of judicious investment, effective lobbying and adaptability to changing policies, Arnault has protected and even strengthened LVMH's position in the global marketplace. As economic and political challenges continue to evolve, this relationship may prove even more crucial in the years ahead.
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