Luxury Stocks Jolted as Trump Tariff Threat Returns
A renewed threat of 200% tariffs on French champagne and spirits has put investors on edge, targeting products from European giants like LVMH and Pernod Ricard.
A spectre of transatlantic trade wars has returned to haunt the luxury goods sector after former President Donald Trump renewed threats to impose crippling 200% tariffs on French champagne and other European spirits.
The rhetoric, which mirrors protectionist policies from his presidency, has cast a pall over the shares of Europe’s largest luxury conglomerates, for whom the United States represents a critical and highly profitable market. The threat specifically targets iconic French products, representing a direct challenge to companies like LVMH Moët Hennessy Louis Vuitton and Pernod Ricard.
LVMH, the world's largest luxury group, owns a formidable portfolio of champagne houses including Dom Pérignon, Moët & Chandon, and Veuve Clicquot. Pernod Ricard controls Mumm and Perrier-Jouët. For these firms, a 200% tariff would be prohibitive, effectively pricing their flagship champagne brands out of the American market and jeopardizing billions in revenue.
This aggressive trade posture is not new, but its revival puts a significant political risk back on the table for investors. The threat was reportedly made in response to a proposed European Union tariff on American whiskey, part of an escalating tit-for-tat dispute that began with U.S. tariffs on steel and aluminum during the Trump administration. According to news reports, the move is positioned as a direct retaliation.
The U.S. remains one of the most important global destinations for high-end European goods. The French wine and spirits export market to the U.S. alone is valued at approximately €4 billion ($4.3 billion) annually. During previous trade disputes, even smaller tariffs of 10-25% on products like French wine and Scotch whisky caused significant disruption and margin pressure for producers.
An escalation to 200% would move beyond mere economic pain and into the realm of a de facto embargo, potentially forcing a complete strategic rethink for the U.S. operations of these European companies. While no tariffs have been enacted, the threat alone introduces a high degree of uncertainty for the sector, which has already been navigating a slowdown in luxury demand from post-pandemic highs.
Analysts will be closely watching for any further developments, as the lingering threat could weigh on stock valuations and force companies to re-evaluate their forecasts and investment plans in the region. The issue highlights the vulnerability of global brands to geopolitical shifts and underscores how quickly trade policy can emerge as a dominant risk factor for investors.