Beauty and the tariff beast: Industry in crisis

What happened A fresh volley of tariffs between China and the U.S. has thrown the global beauty industry into disarray, squeezing margins, raising consumer prices, and threatening the survival of independent brands. For companies already navigating a high-cost macroeconomic environment, the escalating trade friction is proving to be a critical test of resilience and strategy. Following the White House’s decision to impose tariffs of at least 145% on Chinese imports, Beijing retaliated with duties reaching 125% on American goods. For U.S. beauty brands, the escalation could deal a heavy blow. U.S. beauty brands face tough choices in China Previously exempt or lightly taxed cosmetics now face crippling levies, with imported skincare products seeing effective tax rates soar from 34% to 125%. For a mid-tier U.S. eye cream retailing at $28 (RMB 200), this represents an extra $35 (RMB 250) in duties, forcing brands to either absorb the cost or raise prices — both unpalatable options in China’s increasingly competitive landscape. In 2024, China imported $1.76 billion worth of American beauty products, according to a leading Chinese trade association. The new tariffs, which apply indiscriminately across all U.S. cosmetics entering China, could erase profitability for many players — or force price hikes that would push Chinese consumers toward local and regional alternatives. Xiahongshu user @Lemeile shares online: “A truly proud Chinese person is one who refuses to buy products made in the U.S.” On the other side of the Pacific, the U.S. has enacted a blanket “reciprocal tariff” of at least 10% on all imported goods, with even higher rates for countries with large trade surpluses, like China and South Korea. This tit-for-tat escalation is reverberating across the industry supply chain. The Jing Take U.S. beauty giants like La Mer and Dermalogica, are in a strategic bind. Raise prices to preserve margins, and risk alienating Chinese consumers already shifting toward C-beauty or K-beauty. Absorb the duties, and see profits evaporate. Even more vulnerable are indie and mid-sized American beauty brands, many of which rely heavily on Chinese manufacturers for packaging and components. Instead, multinationals like Estée Lauder, which sources some versions of its bestselling Advanced Night Repair serum from plants outside the U.S. in the U.K., Belgium and Japan, might be able to chart a path through the trade war. K-beauty faces rising costs and new risks South Korea, which overtook France in 2024 to become the largest source of U.S. cosmetics imports, is also reeling. A potential 25% tariff would erode the price edge of cult-favorite brands like Glow Recipe and Krave Beauty, both of which have thrived on TikTok-driven virality. While Korean manufacturers remain dominant in high-tech categories like eyeliner pens, cushion foundations, and precision-milled powders, the lack of equivalent capacity in the U.S. makes relocation costly and time-consuming. Executives estimate a four-year, billion-dollar investment would be needed to duplicate South Korea’s production infrastructure domestically. European brands, C-beauty poised to gain market share With American brands facing higher costs and K-beauty being priced out of its “affordable luxury” niche, Chinese beauty brands see an opportunity. Even imported raw materials from the U.S. — such as silicone oils, carbomers, and titanium dioxide — are being phased out in favor of domestic or EU- and Japan-sourced substitutes. China’s Ministry of Commerce has pledged support for exporters now targeting the domestic market. Retailers like Yonghui Superstores and Wuhan Department Store have opened “green channels” to fast-track local listings and co-develop products with affected suppliers. Take Noble Isle, a British heritage bath and body brand that has achieved strong growth in China via cross-border e-commerce. Though not American, it offers a glimpse into how niche Western labels navigate today's tariff-heavy environment. “If we were a U.S. brand right now, our entire China strategy would be under review,” Noble Isle China CEO wrote in a note. “We’re already seeing distributors shy away from American-origin goods because of the uncertainty. As a U.K. brand, this gives us a narrow but clear opportunity.” In other words, non-American players could gain market share simply by staying out of the fray. What’s next for the global beauty industry? As Washington and Beijing double down on protectionism, global beauty players may need to adopt a more fragmented, regionalized supply model — abandoning the efficiencies of a once-globalized ecosystem. Multinationals with flexible production, like Estée Lauder, and diversified sourcing may endure. For others, especially smaller firms and fast-growth K-beauty startups, the coming months may entail a fight for survival. With consumer sentiment, pricing dynamics, and supply chains in flux, the global beauty industry now finds itself at the frontline of an economic cold war — one where even a simple lipstick carries hefty geopolitical baggage.

Beauty and the tariff beast: Industry in crisis

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Published April 14, 2025

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Beauty and the tariff beast: Industry in crisis