Why LVMH Stock Fell Today

Shares of LVMH Moët Hennessy-Louis Vuitton (OTC: LVMUY) slid today as the global luxury giant was one of a wide range of stocks getting hit on the White House's action over the weekend to impose tariffs on Canada, Mexico, and China, though tariffs on Mexico and Canada have since been put on pause for a month.

LVMH stock closed the day down about 2.4%.

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LVMH's tariff exposure

As a global seller of a wide range of goods -- including cosmetics, fashion pieces, alcohol, and jewelry -- that considers China a major market, investors likely worried that LVMH would get hit in any trade war that materializes. Before announcing the pauses, the U.S. had imposed 10% tariffs on goods imported from China and 25% rates on goods from Canada and Mexico, shaking up global markets. President Trump has also threatened to levy an import tax on the European Union.

On the company's earnings call last week, CEO Bernard Arnault framed Trump's election as a positive for the company, saying he observed "the momentum of optimism in the country" following a visit to the U.S., and that LVMH would get subsidies to build production facilities there.

Canada and Mexico are not major markets for LVMH, but China is, and Asia, excluding Japan, was its biggest source of revenue last year at 23.3 billion euros, so any impact on the Chinese economy could affect LVMH stock as well.

As a seller of luxury products, LVMH also seems at risk of tariff-induced price increases because these aren't products that consumers need, and they can find substitutes for, say, a bottle of Moet champagne or a Louis Vuitton handbag if the price is too high.

The tariff uncertainty also comes after LVMH posted disappointing fourth-quarter earnings last week, with the stock falling on weak results that included just 1% organic revenue growth as the company continued to face challenges in China and with the broader global macroeconomic climate.

What's next for LVMH

The fortunes of the world's largest luxury goods company are closely tied to the global economy, and growth is likely to be challenged if a trade war flares. Given the current facts on the ground, 2025 is shaping up to be a difficult year for the luxury stock.

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Jeremy Bowman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.