Trump's policies cost Bernard Arnault $5 billion

The re-election of Donald Trump was initially a boon for some of the richest men in the world, including Bernard Arnault, the French magnate at the helm of LVMH, who was also present at his inauguration in Washington on January 20. In the weeks leading up to Trump's second term, markets had seen a surge due to investor optimism, making billions for the billionaires gathered around the new president, with Elon Musk at the forefront. As reported by Bloomberg, LVMH stock rose by 7% in the days leading up to the ceremony, adding about $12 billion to Arnault's wealth, which reached an estimated value of $183 billion. However, amid an international strategy that saw the explosion of both large and small trade wars due to tariffs, markets reacted poorly. Since the beginning of Trump's second term, the S&P 500 has lost 6.4% – a decline reflecting investors' anxiety over Trump's unpredictability and his policies on tariffs and massive public sector layoffs. The companies linked to the entrepreneurs present at the inauguration have collectively suffered a loss of $1.39 trillion in value since January 17, the last trading day before the swearing-in. Among the hardest hit is Bernard Arnault, whose wealth has decreased by nearly 3%, with a loss of as much as $5 billion in his fortune.

While it remains true that Arnault is the billionaire friend of Trump who has lost the least amount of money, alongside Zuckerberg (Jeff Bezos saw $29 billion evaporate, and Musk $148 billion), LVMH is particularly vulnerable to fluctuations in international trade policy, and Trump’s new threats to impose tariffs of 10% to 20% on European luxury goods starting today have drastically reduced investor confidence. It is important to remember that the United States alone represents 27% of the group's global revenues. LVMH's stock, which had risen by more than 20% after the November elections, suddenly dropped, erasing much of the gains made until then. Morningstar analysts have warned that the introduction of new tariffs could further stifle LVMH's sales, which are already struggling, especially in the United States, where high-end consumers are showing signs of caution due to economic uncertainty. The luxury sector had already faced challenges in 2024 due to weak demand in several key markets, and the added weight of tariffs could further reduce margins. A situation that is far from luxurious. And with LVMH's stock struggling, economic growth that exists but is sluggish and growing uncertainty over demand in China and the impact tariffs will have on the already high price point of products, Arnault will face an increasingly complex situation to protect the profitability of his empire.

The ties between Arnault and Trump go back to the 1980s, and the two have maintained a friendly relationship despite the political tensions between the United States and Europe. The French billionaire was one of the first business leaders to meet with Trump after his election victory, and according to some sources from Bloomberg, he spoke with him the day after the attempted assassination in Pennsylvania last July. It is unclear, however, whether Arnault will be able to leverage his influence to mitigate the impact of U.S. tariffs on LVMH's operations, which has heavily invested in the U.S. both in lobbying and business, opening a Louis Vuitton factory in Texas years ago and already having 14 factories on U.S. soil. Speaking to investors last month, Arnault also hinted at the idea of expanding production in America. There was already a case where Bernard Arnault managed to use his relationship with Donald Trump to protect his business interests. During Trump's first administration in 2019, the United States imposed $7.5 billion in tariffs on various European products, including aircraft, cheeses, and wines, but luxury leather goods remained surprisingly exempt. According to the Wall Street Journal, just one day before this decision was announced, Arnault was with Trump at the opening of the Louis Vuitton factory in Texas. When asked why champagne and leather accessories weren't affected by the new tariffs, the president replied: "Because Arnault came to America". But given the market crash now, more than five years later, it remains to be seen how long he will be able to hold on. Surely the largest luxury empire in the world will not give up 27% of its revenues.