LVMH stock rises 1.3% despite risk of Trump tariffs on French goods

Highlights

LVMH shares gained 1.3% even after Trump threatened 200% tariffs on French luxury goods tied to France’s stance on his proposed “Peace Council.”
Markets initially reacted negatively but later rebounded as investors questioned the probability of enforcement.
The stock remains down 12% YTD amid broader concerns over geopolitical risk and slowing luxury demand.

Trump’s recent comments about the possibility of imposing a 200% tariff on French luxury imports, should France refuse to join his proposed "Peace Council" initiative, initially triggered a broad selloff across the sector. The announcement led to immediate market repricing for luxury brands like LVMH, Kering, and Hermès, with investors concerned about retaliatory trade policy and disrupted sales in the United States — a core market for LVMH’s leather goods and fashion segments. However, despite the geopolitical tension, LVMH shares ultimately rebounded, closing higher as markets reassessed the likelihood of tariffs being implemented and viewed the drop as a short-term overreaction.

These political threats arrive at a time when LVMH is already facing headwinds from a softening Chinese consumer recovery. After initial signs of rebound in early 2026, spending in China has plateaued, particularly in aspirational luxury categories. According to Q3 results released in October, organic revenue growth slowed to low single digits, with fashion and leather goods rising just 1% year-on-year. Wine and spirits posted a decline, with U.S. sales underperforming.

Moreover, foreign exchange effects and cost inflation have eroded margins, contributing to a 17% drop in net profit for 2025, as reported in preliminary earnings statements. Although the company continues to invest in flagship brands — including Louis Vuitton and Dior — and expand its presence in high-growth markets like India and the UAE, macro risks are dominating investor focus.

Technical setup points to range-bound trading with weak momentum

From a technical standpoint, LVMH has found near-term support in the €580–€590 range. This zone aligns with a confluence of historical demand levels and minor moving average supports. The €565 level, hit during last week’s selloff, marked a local bottom before buyers stepped in. The next key support lies around €540, a level tested during last October's correction. If breached, downside could accelerate toward €500–€520, with €436.55 (the 52-week low) as a worst-case support scenario.

Resistance is seen at €600 — a psychological round number and near the 50-day moving average — and then at €645, where the stock topped out during its brief October rally. The current price remains below the 100- and 200-day moving averages, confirming the stock is still in a short-term downtrend. Relative strength index (RSI) readings have moved out of oversold territory, now hovering near 43, suggesting momentum is stabilizing but not yet bullish.

LVMH stock price dynamics (November 2025 - January 2025). Source: TradingView

Volume trends show a recent uptick in selling pressure, especially following negative headlines. That said, the bounce from support and a small bullish gap signal potential for near-term consolidation or a relief rally if external pressures ease.

Rebound potential hinges on geopolitics and earnings

In the near term, the direction of LVMH stock will likely depend on how geopolitical tensions evolve. A de-escalation of tariff threats from the U.S. or conciliatory comments from European trade officials could stabilize sentiment and trigger a technical bounce above €600. In that bullish scenario, the stock could rally toward €640–€650 over the next 3–5 weeks.

However, if tariff rhetoric intensifies, or if upcoming earnings results in early February confirm weaker demand trends, LVMH may retest the €540 support level. A break below that could open the door to a deeper correction toward the €500 handle — a level not seen since early 2022.

Morgan Stanley downgraded LVMH from Overweight to Equalweight, citing limited upside to its €635 price target and stretched valuations. The bank also cut its 2026 EPS forecast by 4%, reflecting a more cautious outlook on China’s recovery and global luxury demand.

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