French luxury goods giant LVMH (LVMUY  ) said on Wednesday that it would be pulling out of an expected takeover of American jewelry retailer Tiffany & Co (TIF  ), citing the ongoing trade war triggered by U.S. President Donald Trump and the costs associated with it. Tiffany has since filed a lawsuit against LVMH to try and force it to complete the deal.

LVMH announced that it would be pulling out of the takeover because the deal was being used in the heated trade dispute between France and the United States. According to the luxury retailer, it received a letter from the French Foreign Ministry asking to delay the acquisition until early next year. LVMH's takeover agreement with Tiffany, however, stipulated that the takeover be completed by November 24.

In general, however, LVMH had been drifting away from the deal well before the letter. Tiffany & Co has suffered greatly from the pandemic, with worldwide sales falling 29% and the company missing expectations by tens of millions of dollars. LVMH CEO Jacques Guiony commented that Tiffany's performance was "lackluster" in recent months. The pandemic is entirely to blame, with luxury good sales, in general, taking a hit as many households tighten their belts to deal with reduced income.

Tiffany & Co, however, has filed a lawsuit in its home state of Delaware to coerce LVMH to complete the deal as stipulated in the agreement between the two firms.

"We regret having to take this action but LVMH has left us no choice but to commence litigation to protect our company and our shareholders. Tiffany is confident it has complied with all of its obligations under the Merger Agreement and is committed to completing the transaction on the terms agreed to last year. Tiffany expects the same of LVMH." Said Tiffany CEO Roger Farah.

It is unlikely that the takeover will continue unless US Courts can coerce LVMH to fulfill its contractual obligation. With trade disputes ongoing between President Trump and European leaders, and the pandemic dealing a substantial blow to Tiffany, even should the pandemic ease in the coming months, there appears to be little to entice LVMH back to the bargaining table.

Tiffany's stock was driven down considerably by the announcement. Shares dropped 6.44% between market close on Tuesday and market close on Wednesday, with the sharpest drop being during overnight trading. Tiffany's share price remained stable at around 6.4% down from Wednesday through the end of the week.