How Bernard Arnault's U.S. Move Could Disrupt French Luxury Industry

The billionaire chairman of the luxury goods conglomerate LVMH, Bernard Arnault, has expressed his displeasure with the state of the French economy.

The richest man in Europe, Arnault, 75, issued a warning that the new policies, which are intended to reduce France's widening budget deficit, may have a significant impact on French companies.

The proposed raise, according to Arnault, is unproductive and will only encourage businesses to relocate their operations overseas.

His words

"I just returned from the USA, and I could see the wind of optimism reigning in that country," Arnault told reporters on Tuesday.

"It's amazing when you return to France and realize that we're going to raise taxes on businesses who manufacture in France by 40%. It's the best approach to promote offshore.

Despite assurances from Finance Minister Eric Lombard that the tax boost will only be in place for a year, Arnault is not convinced.

Things to be aware about

Arnault’s comments come as French lawmakers prepare to debate the proposed budget, which is a reaction to France’s rising budgetary woes. The purpose of the tax increases, which would affect LVMH and other big businesses, is to assist in addressing a growing budget deficit that is being made worse by increased government expenditure.

"My message to all businesses worldwide is very straightforward: Come manufacture your product in America, and we'll give you among the lowest taxes of any country on earth," he stated.You will be required to pay a tariff if you choose not to manufacture your goods in America, which is your right.

In order to avoid the tariffs that Trump has pledged to apply on goods manufactured abroad, this would involve building more factories in the US.

Arnault is considering his alternatives in light of the sharp differences between the economic climates in France and the United States, with the prospect of additional investment in the American market appearing more alluring than ever.