French luxury stocks are diving after Trump threatens $2.4 billion in tariffs on champagne and handbags
- French luxury stocks dropped on Tuesday after US President Donald Trump threatened to slap tariffs on $2.4 billion worth of wine, cheese, handbags, cosmetics, and other French exports.
- LVMH, Christian Dior, and Kering dropped about 2%, while Hermès slumped 2.6%, wiping a combined $9 billion from the four companies' market capitalizations.
- The Trump administration proposed the tariffs in retaliation to France's new digital services tax, which is set to take a 3% bite out of the French revenues of US tech titans such as Apple, Google, Amazon, and Facebook from the start of next year.
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French luxury stocks dropped on Tuesday after US President Donald Trump threatened to slap tariffs on $2.4 billion worth of wine, cheese, handbags, cosmetics, and other key exports.
Shares in LVMH, the luxury titan behind Louis Vuitton and Moët & Chandon, slid about 2%. Christian Dior and Kering - the owner of Gucci and Balenciaga - suffered similar declines. Hermès, the maker of Birkin and Kelly handbags, slumped 2.6%.
Trump's tariffs would dramatically increase the costs to the companies of importing products made in France into the US, disrupting their operations and eating into their profits.
The stock drops wiped a combined $9 billion from the four companies' market capitalizations. Shares in French cosmetics titan L'Oréal and Elior, a commercial catering group, also fell on the news.
The US Trade Representative proposed the fresh tariffs in retaliation to France's new digital services tax, which is set to go live at the start of next year. In its view, the 3% tax on digital-service revenues earned in France - which applies retroactively - discriminates against US companies, doesn't accord with international tax policy, and creates a significant burden for American tech titans such as Apple, Google, Amazon, and Facebook.
France's finance minister called the threatened tariffs "simply unacceptable," and threatened a "strong European riposte" if the Trump administration pulls the trigger on them.
