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The French Billionaire Working His Trump Ties to Spare His Luxury Empire

It was a match made on Fifth Ave.—Bernard Arnault and the president go back decades. Can the LVMH chief now leverage that bond to fend off tariffs?

President Trump and Bernard Arnault arrived in Texas for the inauguration of a new Louis Vuitton workshop in 2019. NICHOLAS KAMM/AFP/GETTY IMAGES

President Trump and Bernard Arnault arrived in Texas for the inauguration of a new Louis Vuitton workshop in 2019. NICHOLAS KAMM/AFP/GETTY IMAGES

The day after President Trump survived an assassination attempt in Pennsylvania last summer, he received a call from a familiar French voice. It was Bernard Arnault, owner of the globe-spanning luxury empire LVMH MC -1.87%decrease; red down pointing triangle.

Arnault wanted to check in on the man he had known for decades. Trump was also in the middle of a fierce presidential campaign, as well as several criminal proceedings.

The phone call from Arnault sent a clear signal: The luxury titan was sticking with Trump through thick and thin.

With Trump now in office and warning of steep tariffs on European goods, the question is whether Arnault can leverage his connection to keep his luxury conglomerate out of any trade wars. Tariffs would be a blow to Arnault’s empire, whose largest market is the U.S.—equal in size to all of Europe combined. Trump has called the European Union’s trade surplus with the U.S. an “atrocity,” but he also often leans on personal relationships to guide his policy.

The ties between the families are extensive, dating to when the two patriarchs were up-and-coming property developers in Manhattan. Arnault’s second-eldest son, Alexandre, has become friends with Trump’s son-in-law Jared Kushner. Ivanka Trump is a friend of Arnault’s daughter, Delphine, and a devotee of Dior, the brand Delphine oversees as CEO. The Arnaults’ conglomerate even pays rent to the Trump Organization, which is the landlord for LVMH’s Louis Vuitton store in Midtown Manhattan. 

During Trump’s first term, Arnault’s decision to expand handbag production in the U.S.—and publicly promote the move with Trump—helped the luxury industry largely avoid an initial wave of tariffs that hit other European sectors. Trump left office before a second salvo of tariffs could take effect. Those levies, which some dubbed the “LVMH tax,” were designed to hit luxury goods in retaliation for a French digital tax affecting U.S. tech giants.

This time the contours of any trade war with Europe are unclear—Trump has so far backed off threats to Mexico and Canada. But Trump has ordered federal agencies to explore how to adjust U.S. tariffs to match those of other countries, an approach that threatens international trade rules in place for decades. The LVMH tax, meanwhile, still hangs over Arnault’s business empire.

Arnault built his luxury conglomerate into Europe’s most valuable company by betting on the marketing power of European craftsmanship. Consumers around the world pay eye-watering prices for handbags and other baubles because they are largely made in Europe with French savoir faire.

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Author: Editors Desk, Nick Kostov and Stacy Meichtry

Source: WSJ:

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