The insight: “Liberation Day” tariffs are striking fear into the hearts of beauty brands and shoppers alike. Both parties are bracing for higher costs and potential supply chain disruptions, while recession concerns are injecting considerable uncertainty into consumers’ spending plans.
The headwinds: Beauty spending was already normalizing prior to the tariff announcements, as the category’s breakneck growth during the post-pandemic years proved impossible to maintain and financial pressures caused consumers to cut back. Tariffs are likely to accelerate that trend, as price hikes and economic volatility push more shoppers to rethink their beauty expenditures.
- A Tinuiti survey conducted in January—before the specifics of the Trump administration’s tariff policies were unveiled—found that 38% of beauty consumers were already buying fewer products due to inflation, while 37% reported searching for more coupon or discount codes, and 35% traded down to cheaper brands.
- Nearly 3 in 10 shoppers (29%) are likely to cut back on beauty products if tariffs cause prices to rise, according to a March survey by CivicScience.
And unfortunately for consumers, tariffs are all but guaranteed to result in higher prices, even for products made in the US.
- Items from South Korea and France—the two top importers of beauty products to the US—are currently subject to a 10% universal tariff. That number could rise to 25% for Korean imports and 20% for French goods once the temporary reprieve on reciprocal duties is up in July.
- As in other industries, brands are reliant on foreign markets to produce goods and product components more cheaply—and capably—than they would be able to in the US. For instance, packaging is one area where companies depend on China, and one that now faces tariffs of at least 145%.
Silver linings: For all the uncertainty facing the beauty industry, there are clear trends that brands can latch onto.
- Spending is shifting online. Channels like Amazon and TikTok Shop are gaining beauty share—the former for its convenience and wide product selection, and the latter for its ability to drive impulse purchases.
- Younger consumers are spending happily. Teen spending on beauty jumped 10% YoY, according to the spring edition of Piper Sandler’s teen survey. Likewise, Gen Alpha’s enthusiasm for beauty shows no signs of dimming, helping to drive sales of premium as well as mass market brands.
- Men are spending more on beauty and personal care. Over half (52%) of men use facial skincare products, according to a July 2024 Mintel survey. Interest in other categories is also rising: For instance, 53% of male teens report wearing a fragrance daily, up 10 percentage points YoY, per Piper Sandler.
Our take: While escaping tariffs is all but impossible, there are some steps beauty brands can take to soften the hit to their profits and avoid alienating price-sensitive consumers.
- Take a surgical approach to price hikes. Instead of across-the-board increases, companies should identify where demand is likely to hold up if prices rise, and which products or categories are more sensitive.
- Rethink production. While this isn’t feasible for most brands given the amount of time and money required to set up local manufacturing, companies that have the means to do so should explore their options.
