The European Union urgently needs to ease tensions with the United States over President Donald Trump's tariffs, LVMH CEO Bernard Arnault said Thursday, adding that it would be "Brussels' fault" if no solution is reached.

LVMH, the world's largest luxury group by sales, makes around a quarter of its revenue in the United States.

'NEGOTIATE INTELLIGENTLY'

"If Europe is not able to negotiate intelligently, there will be consequences for a lot of companies," Arnault said. "It will be Brussels' fault" if trade talks do not result in a satisfying resolution, he added.

"European countries should try to manage these negotiations, and not leave them to bureaucrats," he said at the group's annual shareholder meeting.

The European Commission was not immediately available for comment.

Arnault said that the current market turmoil, which he said without mentioning Trump was linked to global trade tensions, risked harming LVMH's business, especially in the less wealthy segment of luxury shoppers.

U.S. tariffs could include a 20% charge on European fashion and leather goods and 31% for Swiss-produced watches if fully applied. Last week, Trump paused his reciprocal tariffs on most countries for 90 days but maintained a general 10% levy.

Earlier this year, Arnault — who is France's richest man — praised Trump for boosting economic growth and entrepreneurship, after attending his inauguration.

"I've just come back from the U.S. where you can see the wind of optimism going through the country. And when you come back to France after spending a few days in the U.S., it's a bit of a cold shower, I have to say," he said at the company's annual results presentation on January 28.

Since then, LVMH's shares have fallen by 36%, dragged down by investor fears over Trump's trade policies and a possible recession in the United States, wiping out over 100 billion euros in the group's market capitalisation.

Sector rival Hermes overtook LVMH as France's most valuable company by market cap this week. Around half of the LVMH's shares are owned by the Arnault family.

MORE US MANUFACTURING

Arnault repeated on Thursday that he was looking at moving more production to the United States.

"We have part of our production in the United States... and we would be forced to increase our American production, to avoid Europe," Arnault said.

"I've already heard of several companies who think about shifting more production to the United States, but you must not say this would be the fault of the companies. This would be Brussel's fault."

Analysts said any production shifts would likely be limited and only play a minor role in mitigating tariff risks.

LVMH, which makes billions selling "made in France" luxury goods from leather handbags to champagne to the world, so far has little production capacity in the United States besides three Louis Vuitton workshops and some Tiffany jewelry-making sites.

The company has faced a host of problems limiting production at its high-profile Texas facility, with the site consistently ranked among the worst-performing for Louis Vuitton globally, Reuters has reported.