Trump Threatens Tariffs On French Luxury Goods

Shares of French luxury brands plunged on Tuesday following an overnight threat from the White House to hit French luxury imports with a 100% tariff. The move would impact roughly $2.4 billion worth of products from champagne to hand bags.

The tariff was threatened by U.S. President Donald Trump as a retaliatory move against the French digital services tax, which will be levied against U.S. technology companies beginning in January 2020 and will also be assessed retroactively. The 3% tax is being called an unfair burden on U.S. tech companies by the U.S. President.

Shares of LVMH, which owns such luxury brands as Moet Chandon, Hennessey, Louis Vuitton, Fendi, and most recently Tiffany, fell 1.5% on the news. However some analysts said such a luxury tax wouldn’t likely have a long-term impact on LVMH with its broad stable of brands and global sales base. LVMH shares are up 50.1% over the past 52 weeks.

Also falling on the news were shares of Kering, which owns the Gucci and Yves Saint Laurent brands. Shares were down 1.9% on the news, but remain up by 31.1% over the past 52 weeks.

Hermes shares slumped 2.5%, although the stock is 32.3% higher in the past 52 weeks.

The U.S. Trade Representative said the French digital services tax is out of accord with international tax policies, and places a significant burden on tech giants Apple, Facebook, Alphabet, and Amazon.

On the French side the Finance Minister called the threatened tariffs “simply unacceptable”, and threatened a strong response from Europe if the tariffs actually materialize.