PARIS (Reuters)-The European Union (EU) must urgently appease tensions with the United States concerning the customs duties imposed by President Donald Trump, said the president and chief executive officer of LVMH Bernard Arnault on Thursday, adding that it would be “Brussels’s fault” if no solution was found.

LVMH, the world’s leading luxury group by turnover, has approximately a quarter of its sales in the United States.

“European states should be able to try to control this negotiation, not to leave them to bureaucrats,” he said at the annual meeting of the group’s shareholders.

The current turbulence linked to global trade tensions, added Bernard Arnault without mentioning Donald Trump, are likely to harm LVMH activities.

American customs duties could reach 20% on European fashion and leather goods articles and 31% on watches produced in Switzerland if these measures are fully applied. Last week, Donald Trump suspended reciprocal customs duties on most countries for a period of 90 days, while maintaining a general levy of 10%.

Earlier this year, Bernard Arnault, the richest man in France, praised Donald Trump’s desire to stimulate economic growth and business spirit, after having attended his inauguration.

“I come back from the USA and I could see a wind of optimism. In France, it’s a bit of a cold shower,” he said during the presentation of the group’s annual results on January 28.

Since then, the LVMH title has dropped by 36%, investors concerned about the trade policies of Donald Trump and a possible recession in the United States, erasing more than 100 billion euros from the group’s market capitalization.

This week, the luxury group Hermès delighted the place of first capitalization of CAC 40 at LVMH. About half of LVMH’s shares are held by the Arnault family.

Production changes

Bernard Arnault repeated Thursday that he was planning to relocate more production in the United States.

“We have a part of our production that is done in the United States (…) and we will have to increase our American productions necessarily, to avoid customs duties,” said Bernard Arnault.

“I have already heard several companies that plan to increase their capacity in the United States. But it should not be said that it is the fault of companies, it will be Brussels’s fault if it should happen.”

The European Commission, the EU executive body said that the United States had not yet defined its negotiation position, while US officials have not commented on discussions with the EU.

Analysts believe, however, that any production transfer would probably be limited and would only play a minor role in mitigating risks linked to customs duties.

LVMH, which earns billions by selling the world of luxury products “Made in France”, ranging from leather handbags to champagne, has so far only has a low production capacity in the United States, with the exception of three Louis Vuitton workshops and some Tiffany jewelry manufacturing sites.

The group was faced with a series of problems limiting production in its Texan factory, the site being regularly classified among the least performing of Louis Vuitton on a global scale, Reuters reported.

(Report by Mimosa Spencer and Tassilo Hummel, with Jan Strupczewski, Elena Smirnova, edited by Kate Entringer)

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