This article has been updated.
As President Donald Trump was sworn into office, the spectre of heightened US tariffs loomed large, introducing a wave of uncertainty across industries, including beauty. The implications for supply chains and manufacturing processes are raising critical questions — not least, are they reshoring a sustainable solution for beauty brands navigating this shifting trade landscape?
Trump, who was inaugurated 20 January, has confirmed a few of his previously sweeping tariff proposals, including an additional 10 per cent on goods from China, with additional potential tariffs possibly targeting other countries. He has also confirmed a 25 per cent tariff on imports from Canada and Mexico effective from 1 February, signalling an intention to renegotiate the United States-Mexico-Canada (USMCA) trade agreement. (Trump threatened to increase duties on Mexico in 25 per cent increments each quarter, ultimately reaching 100 per cent if the country fails to address the migration issues at its borders.)
These aggressive tariff strategies highlight a significant pivot towards reshaping US trade policies. According to the Tax Foundation, proposed tariffs set to take effect between 2025 and 2034 could generate $1.2 trillion in tax revenue but at the cost of reducing gross domestic produce (GDP) by 0.4 per cent and eliminating more than 340,000 jobs across the US. For a sector deeply reliant on global manufacturing, such economic headwinds pose serious challenges.
The potential for increased tariffs under the Trump administration could create ripples across the beauty industry, threatening profitability and stability. Higher tariffs threaten to disrupt the industry’s delicate supply chains, driving up costs for ingredients, packaging and finished goods — much of which is sourced globally. These rising costs could stifle innovation, as brands face pressure to reformulate with locally sourced alternatives or delay product launches.
Smaller, independent beauty brands, lacking the financial flexibility of larger conglomerates, are particularly vulnerable to these shifts, which could reduce competition and diversity in the market. As prices rise, consumer behaviour may shift towards private-label offerings, domestic brands, or simplified beauty routines, further complicating the landscape. For an industry reliant on international suppliers and intricate production networks, tariffs pose a significant challenge, demanding swift adaptation to sustain growth and relevance.
The Personal Care Products Council underscores the beauty industry’s vital role in the US economy, contributing a $2.6 billion trade surplus and fuelling $308.7 billion in GDP. Over 25,000 products in the US mass beauty market, primarily from China, may face price hikes if tariffs are enforced. Anna Mayo, VP of marketing research firm NielsenIQ’s Beauty Vertical, highlights cosmetics as the most exposed category, with over 11,000 products at risk, followed by bath and shower, and oral care.
Rising production costs driven by tariffs, meanwhile, could erode margins, inflate retail prices and diminish consumer demand. Globally, the tariff climate remains volatile, with looming hikes across multiple markets threatening to exacerbate these issues.
Given Trump’s penchant for employing tariffs as a trade tactic, the beauty sector can look to the not-too-distant past for clues about how duty changes would play out. Under the previous Trump administration’s tariffs, US imports from China shrank by $87.4 billion — a 16.2 per cent year-on-year decline — bringing the total to $452.2 billion in 2019, according to the US International Trade Commission. However, overall imports remained relatively stable as importers shifted production from China to other attractive international sourcing locales, says Angela Santos, partner and customs practice leader at law firm ArentFox Schiff.
If Trump applies a “broad-brush” approach to tariffs, beauty imports will inevitably cost more, especially if duties are applied to skincare and cosmetics power producers like France and South Korea, says Neil Saunders, managing director of retail at data analytics company Globaldata.
Domestic production: A double-edged sword
The prospect of reshoring production presents a potential buffer against tariff volatility, offering benefits such as reduced lead times, enhanced quality control and lower carbon footprints. Laura McCann, CEO of fragrance company Adoratherapy, highlights the advantages of local manufacturing, emphasising the ability to handcraft premium products while reducing shipping distances and emissions.
However, these benefits come with significant caveats. Currently, only a small fraction of beauty and personal care products sold in the US mass market are made domestically — just 7 per cent, according to NielsenIQ data. Haircare, cosmetics and nail products (34 per cent), and bath and shower (18 per cent) dominate this limited share. While US-made beauty items come with a 5.5 per cent premium, Mayo notes that the rising production costs could further challenge brands trying to strike a balance between affordability and price increases.
Higher labour costs and the limited availability of raw materials in the US can significantly ramp up production expenses. Experts highlight the complexity of sourcing specialised ingredients domestically, as many are not native to the region, so shipping these components into the US adds further complexities and costs, says Santos. “Raw materials imported from China and other countries would have to be subject to increased tariffs, and then they’ll be subject to higher production costs in the United States,” she says. Since tariffs are typically calculated as a percentage of the imported product’s value, the cost impact on raw materials — which are often valued lower than finished goods — might be less significant. But these expenses still accumulate over time, adding another layer of financial strain for brands exploring onshore production.
Compliance with regulatory frameworks, such as Food and Drug Administration (FDA) standards, can introduce delays and additional costs for brands unfamiliar with US requirements, Santos notes.
“For smaller brands, the hurdles are steep,” says Elizabeth Patel, founder of À La Glow Holistic Skincare, explaining the challenges of sourcing onshore packaging providers. “A huge part of the problem is the lack of a centralised, user-friendly platform for domestic suppliers — an American equivalent of Alibaba.com. Right now, finding suppliers feels like hunting in the dark. It’s incredibly frustrating when you’re trying to support local production but face roadblocks at every turn,” she says.
Although McCann manufactures her products in Asheville, North Carolina, her company sources packaging from China and placed orders in December to ensure goods arrived before 20 January, anticipating tariff hikes on items like bottles and boxes.
Kate Assaraf, founder of Dip Haircare, has similarly encountered obstacles when it comes to domestic production. American manufacturers typically demand larger minimum order quantities and charge higher tooling costs, putting smaller brands at a disadvantage. Moreover, shifting production to the US often requires significant capital investment, with the promise of returns potentially years away, she explains. For niche and premium brands, these costs can be mitigated by positioning their products at higher price points and focusing on the appeal of ethical sourcing and sustainability.
Supply chain makeover
For brands considering reshoring, a hybrid approach may be most effective. Onshoring select high-margin or flagship lines could allow brands to test domestic production while mitigating financial risks. This strategy enables brands to emphasise their ‘Made in the USA’ credentials while safeguarding their broader portfolios.
Nearshoring by switching production to neighbouring countries like Canada and Mexico could serve as a strategic middle ground, says Susannah Dellinger, CEO of Bright Beauty Collective, which helps conscious beauty brands amplify their impact at Bluemercury, Bloomingdale’s, Bergdorf Goodman and beyond. “But it’s important to note that supply chain diversification should go hand-in-hand with actual market diversification,” she explains. “Too often, emerging beauty brands focus solely on US retail distribution first, thinking global expansion is a ‘someday’ goal. This tariff climate is a stark reminder that being overly reliant on one market — whether in production or sales — is risky.” Brands should explore international retail channels earlier, and tap into markets like the UK, Canada and parts of Asia where clean beauty is doing brisk business, she adds.
However, nearshoring may not be the most efficient solution for multinationals with highly advanced supply chain operations that already include regional facilities within trade unions or trade agreements, such as the EU or USMCA, says Stephan Kanlian, associate chair of the cosmetics and fragrance marketing and management programme at the Fashion Institute of Technology. These set-ups are designed to maximise efficiency and minimise the cost of goods. For smaller firms, Kanlian believes nearshoring can also prove ineffective if they lack the volume necessary to achieve economies of scale.
The path forward
As the landscape of tariffs continues to evolve, beauty brands are being urged to take swift action in mitigating potential fallout.
Greg Husisian, chair of Foley Lardner’s international trade and national security practice, encourages brands to quickly assemble a due diligence plan and gather data to assess their risk exposure. “Ask your customs broker for a copy of a full list of imports for the last three years from the Automated Commercial Environment (ACE) port,” he says. “Then, use this and other import data to understand where the areas of greatest tariff risk exist and formulate plans regarding how to cope with various tariffs.”
Ultimately, the ability of beauty brands to thrive in a tariff-impacted world will depend on adaptability and vision. Lindsay Nahmiache, CEO of Veriphy Skincare, advises brands to view this potential shift as an opportunity to innovate. “Partner with reliable domestic manufacturers, streamline operations and align your brand story with local production values,” she says. “Leveraging this as a competitive advantage, especially with a ‘locally made’ narrative, can resonate strongly with today’s consumers. We are returning to a less is more era, where effectiveness and simplicity will win over hundreds of SKUs.”
Comments, questions or feedback? Email us at feedback@voguebusiness.com.
