The luxury goods giant LVMH suffered sharp market losses, with its shares on the Paris stock exchange falling by more than 3% to settle at €565.10 (approximately $663) on Tuesday. This came in the wake of surprise statements by US President Donald Trump, who threatened to impose a 200% tariff on French wine and champagne.
These developments followed Trump's hint, during a press conference in Miami, at the possibility of penalizing French products in response to French President Emmanuel Macron's reported refusal to join the US-led peace initiative for Gaza, which Trump dubbed the "Gaza Peace Council." Trump sarcastically remarked, "I will put a 200% tariff on their wine and champagne, and they will join." These statements did not go unnoticed in the financial markets, as they caused a sharp drop in the fortune of Bernard Arnault, Europe's richest man, who lost an estimated $12.5 billion in just 24 hours, according to Forbes. Although Arnault still ranks seventh globally among the world's wealthiest individuals with a net worth of approximately $169.8 billion, these losses reflect the sensitivity of the luxury goods sector to geopolitical tensions.
LVMH, whose portfolio includes some of the most prestigious French brands in the world of fine wines, such as Moët Chandon, Dom Pérignon, Vive Clicquot, and Château d'Iquem, is among the hardest hit by Trump's threats, given its heavy reliance on US exports in this sector.
The repercussions extended to European markets more broadly, with their indices experiencing a significant decline for the second consecutive day, amidst a widespread sell-off driven by concerns over escalating trade tensions between the United States and the European Union. These developments come just days after Trump announced his intention to impose 10% tariffs on imports from eight European countries, amid his ongoing dispute over Greenland.
Amid this turbulent atmosphere, investors are anxiously awaiting the impact of these tensions on market performance during the World Economic Forum in Davos, where trade war issues and transatlantic relations are expected to dominate the agenda.
