As President-elect Donald Trump prepares to reenter the White House on January 20, the beauty industry is bracing for potential ramifications from proposed tariffs.
Trump has most recently threatened 100 percent tariffs on the BRICS nations of Brazil, Russia, India, China, South Africa, Iran, Egypt, Ethiopia and the United Arab Emirates if they go ahead with a new currency. This is in addition to the 25 percent tariffs he has mooted for all goods. This threat adds to Trump’s musing over 25 percent tariffs on goods from Canada and Mexico and even higher tariffs for China.
The impact of such tariffs on the beauty industry could be significant. In the case of China alone, U.S. imports of toiletries and cosmetics from the country amounted to more than $1.5 billion in the year leading up to October, according to government data. This figure excludes ingredients and packaging, much of which is also sourced from China.
David C. Chung, Founder and CEO of iLABS and Morae Packaging, stated that increased taxes on imported beauty products could drastically affect consumer prices due to heightened import costs and supply chain disruptions requiring product reformulations. The possibility of increased tariffs suggests that beauty products could become noticeably more expensive by 2025, potentially pushing consumers toward more affordable options.
Among the companies most affected is E.l.f. Beauty, which, despite reducing its dependency, still imports 80 percent of its goods from China. Tarang Amin, CEO of E.l.f., shared insights from their experience with 25 percent tariffs since 2019, stating that the company developed a balanced approach utilizing pricing, foreign currency exchange, supplier concessions, and cost savings.
Notably, E.l.f. has diversified its manufacturing locations, decreasing its total dependency on China from 100 percent to less than 80 percent by moving parts of its operations to other regions in Asia, the U.S., and Europe. Amin stressed confidence in his team’s ability to navigate potential challenges through continued diversification.
Other industry experts emphasize the importance of diversification as a strategy to mitigate tariff impacts. Chung suggested that brands explore manufacturing options outside of China, such as Vietnam or South Korea, to realize substantial savings on tariffs. While transitioning manufacturers requires time, it offers long-term advantages, including cost reductions and supply chain resilience.
