As the Trump administration’s latest tariffs policy rocks global trade, the beauty industry is bracing for impact.
The European Union has proposed 25 per cent retaliatory tariffs on all US imports, including beauty and personal care products. The proposal comes in response to the latest Trump tariffs, which slapped 20 per cent duties on the region as part of the administration’s ‘Liberation Day’ trade strategy. Failing negotiations, the EU will retaliate.
If the proposed 25 per cent tariffs on perfumes, shampoos, skincare products and makeup come into force, the repercussions could be severe, disrupting pricing, supply chains, product innovation and sustainability efforts.
The tariffs would be particularly costly for European beauty giants and brands already contending with slower growth, price-sensitive consumers and ongoing economic headwinds in China. European beauty companies — including conglomerates such as L’Oréal and Beiersdorf — export €26 billion worth of goods annually, making Europe the largest global beauty exporter, according to Oxford Economics, an economic advisory firm.
“The tariffs will make the purchase of EU beauty goods higher for the US consumer,” says Suzanne Scott, associate global beauty director at strategy firm Seen Group. “A 50ml bottle of Chanel Coco Mademoiselle Eau de Parfum, for example, currently costs between $140 and $150. The tariff could add another $35 to the price. It’s not an insignificant sum.”
Beauty leaders warn that tariffs could backfire on the EU. Executives, part of the Value of Beauty Alliance association (founded by six companies included L’Oréal group, Beiersdorf, International Flavors and Fragrance, Givaudan, Kiko Milano and Ancorotti cosmetics to ensure the industry’s value chain is taken into consideration by European policymakers and establish regular dialogue regarding the impact of EU policies), met with EU officials on 18 March, where tariffs and retaliatory measures were on the agenda, a spokesperson for the association tells Vogue Business.
“Our hope is that retaliatory measures do not escalate,” the spokesperson continues. “Europe is a world leader in cosmetics and personal care. Putting beauty and cosmetics on the European retaliation list would be a very bad idea, so it is a high preoccupation for all the CEOs of the Value of Beauty Alliance. We call on policymakers to ensure that EU trade policy is designed to support the competitiveness of our value chain on the world stage.”
While the EU’s countermeasure tariffs have yet to be confirmed, experts are already examining what companies can do next to safeguard their margins and protect their market share.
Adopt smart pricing strategies
With tariffs potentially increasing the cost of beauty and personal care products by 25 per cent, brands must carefully navigate price adjustments.
“Tariffs are going to raise the prices for brands and conglomerates in both domestic and international marketplaces,” says Brendan Heegan, founder and CEO of Boxzooka, a third-party logistics fulfilment service company based in the US. However, Nancy Qian, professor of economics at Northwestern University, advises brands to hold off on raising prices immediately.
“If brands pass on the cost to consumers too soon, and with minimal communication, they risk losing customers permanently, as consumers will seek alternative products and brands — and it’s difficult to win them back,” she says. Customer retention is even more critical in light of the uncertain consumer sentiment emerging in regions like the US, where economic uncertainty adds another layer of complexity.
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Qian recommends that brands absorb tariff-related costs where possible to maintain price stability. But if costs become unsustainable, a well-communicated pricing strategy is essential. “Brands should explain that they’ve carried the cost burden for some time but have had to increase prices in line with tariffs to maintain quality and the best experience for customers,” she adds. “Price taglines such as ‘the tariffs are 25 per cent and we’re only raising our prices by 10 per cent’ are justified. It’s just about communication, and that’s very important for maintaining brand loyalty.”
For brands that need to get creative with pricing, experts suggest exploring tiered pricing, flash sales, subscription models and smart bundling, such as pairing products to soften the blow while protecting margins.
Build supply chain resilience
The beauty supply chain — already strained by post-pandemic logistics challenges and rising material costs — faces additional pressure if tariffs are imposed. Raw materials, ingredients and packaging, particularly those sourced from regions most affected by tariffs, could see the highest cost increases. “Speciality ingredients, fragrances and essential packaging materials such as glass, plastics and dispensers may see price hikes due to limited alternative sources,” says Andriana Bantara, principal analyst at market research company Kantar. Rising input costs will directly affect manufacturing expenses, eventually pushing up retail prices.
Bantara advises brands to explore alternative sourcing and localised production strategies to mitigate pricing pressures and reduce supply chain strain. Qian agrees: “Supply chains will need to be reorganised to be shorter, more localised, and ideally local within the same region.” This approach will also help larger companies buffer against geopolitical risks in areas such as Eastern Europe and the South China Sea.
However, onshoring presents challenges. “The industry relies on materials that can’t be completely sourced or replicated in the US or EU, such as Asian or African oils,” Qian explains. Additionally, strict patent protections often require certain formulations to be sourced from specific regions. Given these constraints, experts recommend that companies establish parallel supply networks (developing multiple sourcing options across different regions) to minimise dependency on any single market. Diversifying supplier partnerships and investing in regional production hubs can provide greater operational flexibility, ensuring that brands can swiftly adapt to disruptions without compromising product quality or availability.
“We may also see greater consumer and retailer interest in stocking locally made brands, particularly those that can manufacture locally and tell a compelling origin or founder story,” says beauty marketing strategist Aggie Burnett. This trend could create new avenues for local and niche brands to expand their domestic presence.
Explore new growth areas
To offset potential revenue losses, brands should invest in emerging consumer markets such as Southeast Asia, the Middle East and Africa, which have been showing strong growth in recent earnings quarters. For Bantara, tailoring product offerings and marketing strategies to regions less affected by tariff hikes, brands can tap into new consumer demand while maintaining global growth. “By nurturing trade alliances with countries offering favourable tariff conditions or free trade agreements, brands could potentially diversify revenue streams, safeguard profitability and reinforce their competitive positions against the backdrop of escalating global trade tensions,” she says.
This pivot carries operational risks, however, including stretched bandwidth and a potential dilution of brand focus. Qian suggests that brands conduct thorough market research and establish strong local partnerships before expanding. “Success in these regions depends on nuanced cultural insights and a deep understanding of local consumer preferences,” she explains.
US and EU retailers could also gain better control by doubling down on their private-label products. “As prices hike, a significant portion of consumers, especially younger demographics, are becoming sensitive to price, so the pressure will prompt them to explore affordable alternatives,” says Bantara. But Antonella Colella, founder and managing partner of Colella Legal Studio, a trademark law firm, warns retailers to approach with caution. “Developing and expanding private labels is an option, but it’s highly dependent on costs. Retailers can lean into the category but only if they can control production and manufacturing costs; otherwise, they will come up against the same challenges as brands,” she says. The smart move? “Retailers need to be nimble. Expect a mix of price adjustments, promotions, pivots towards local brands and striking the right balance when stockpiling on strong performance brands — it’s a gamble,” Colella says.
Strengthening direct-to-consumer (DTC) and e-commerce platforms can help brands maintain competitive pricing and secure higher margins (compared to the tighter margin squeeze expected from retail price hike fallout) while deepening relationships with their core customer base. “DTC will get scrappy and strategic,” says Burnett. “Brands shouldn’t default immediately to discounting. Instead, they should lean into their brand storytelling, values and VIP perks to maintain perceived value and keep retention high.” Focusing on DTC efforts now will also help brands brace for potential price increases further down the line while building a stronger, more engaged community of loyal customers.
The next few months will be pivotal as brands prepare for potential trade tensions while staying true to their values and maintaining customer trust. But, as Qian says, “brands that act with agility, strengthen supply chains, explore new growth avenues and maintain a commitment to innovation will weather the storm.”
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