PARIS — As President Donald Trump wages and threatens trade wars in various parts of the world, the European beauty industry is bracing for the possibility of a 25 percent tariff being slapped on its exports to the United States.
That comprises a big business. In 2023, the trade flow of cosmetics from the EU to U.S. equaled $4.96 billion, according to France’s beauty association, the Fédération des Entreprises de la Beauté, or FEBEA.
France, where beauty products are the second-largest export category overall after aeronautics, is the largest fragrance and cosmetics exporter to the U.S. France is followed by Italy, Spain, Germany and the Netherlands, among the 27 EU nations.
Related Articles
Xavier Gueant, director of legal and international affairs at FEBEA, called the current international context “extremely precarious and important.”
While the EU remains the largest beauty export market for France, number two is the U.S., generating 2.8 billion euros in sales. One in five French fragrances is exported to the U.S., to give an idea of the scope. China ranks third.
There is a sense of urgency being felt by many European beauty executives, even if Trump has not yet concretely laid out what might be to come. For now, his threats and actions mostly concern other sectors.
As examples: On Thursday, the president said he might impose a 200 percent tariff on alcoholic beverages from the EU, unless the 50 percent tariff levied Wednesday on incoming U.S. spirits by the European government is taken back. Trump’s 25 percent tariffs on steel and aluminum imports began at midnight on Wednesday, then the EU said it would retaliate with tariffs on American goods — such as boats and bourbon — worth up to 26 billion euros, in line with the scope of the U.S. tariffs, starting April 1.
Blink, and you miss it. It’s all moving so fast. Countries keep pushing back.
“D. Trump is escalating the trade war he chose to start,” wrote French Trade Minister Laurent Saint-Martin in a post on X Thursday. “France remains determined to respond with the European Commission and our partners. We will not give in to threats and will always protect our sectors.”
The categories impacted could become more wide-ranging. On Feb. 26, before he made good on his duties related to Canada, Mexico and China, Trump during a cabinet meeting said that he’s considering 25 percent tariffs on EU products in general. That means fragrances and cosmetics might be involved, as well as other luxury goods.
The president’s threats are coming in fits and starts, and sometimes he backtracks, making business planning difficult.
On Feb. 27, the day after Trump made his 25 percent claim, Puig chairman and chief executive officer Marc Puig brought up the subject of tariffs while presenting the Spanish beauty and fashion company’s full-year 2024 results.
He said the group had priced tariffs into its 2025 sales projection, but not at the 25 percent level just floated by Trump.
“With the strength of our brands and our healthy gross margins, we are able to cope with tariffs to some extent,” he said. “If this level of tariffs is finally implemented, we would need to reassess the potential impact to adjusted EBITDA margin for the year. We continue to monitor the situation.”
Many question marks remain — whether the tariffs will be put in place at all and if so, which product categories they’d impact and when they would be put into effect.
“Then we will be able to assess if there is any impact on our business,” said Puig.
In a statement, Astrid Hermann, chief financial officer of Beiersdorf AG, said: “About one-third of the Beiersdorf Group’s U.S. sales are generated with products manufactured in the U.S. for the U.S. market. Two-thirds of the U.S. business is produced outside the USA, the majority of this in Mexico.
“According to our assessments, 25 percent U.S. tariffs on imports from Mexico could have a negative impact of around 50 [basis points] on our consumer business margin, before measures to mitigate these effects,” she added. “We continue to monitor the situation and work on mitigating the effects of U.S. tariffs. In addition to an increase in inventories, we may need to consider the possibility of price increases. Before considering medium- and long-term measures, we need more clarity with regards to U.S. tariffs.”
Hermann said the U.S. remains a highly important growth market for Beiersdorf, “which we want to continue to expand in the coming years with strong brands and market launches.”
The U.S. has always been a key geography for beauty players, but it is even more so now as the Chinese market continues facing headwinds much longer than expected after the coronavirus pandemic.
The U.S. is attractive for a variety of reasons, including it being one of the few developed markets with population growth. Over the next five years the country’s number of potential customers is expected to increase by 12 million. That will be spurred by the Latino population, which is younger and with a keen beauty focus, particularly in makeup and fragrance.
The number of consumers identifying themselves as multiracial in the U.S. has more than tripled over the last decade to make up over 10 percent of the country’s population. That’s set to keep getting bigger and will result in new beauty needs. Further, the U.S. also has one-third of the global population of affluent consumers, making up 60 percent of their global spend.
Like Beiersdorf, other big multinationals such as L’Oréal and LVMH Moët Hennessy Louis Vuitton already have large manufacturing footprints in the U.S.
Mid- to small-sized beauty makers, which generally do not produce products on U.S. soil, are poised to be hit much harder by higher U.S. tariffs than their larger counterparts. SMEs are a force in the beauty industry, comprising more than 80 percent of FEBEA members.
“A lot of SMEs, many mid-size companies had made their export plan for 2025 somewhat focused on America,” said Guenant. “It is a very big concern, because there is this question of diversification of export markets.”
If Europe were to retaliate to hypothetical U.S. tariffs on EU beauty products, it would impact the U.S.’ beauty trade toward the bloc, which in 2023 was the equivalent of $2.16 billion, FEBEA statistics show. France is the largest importer of U.S. beauty goods, with Germany second, the Netherlands third, the Czech Republic fourth and Poland fifth.
“There are commercial exchanges that are quite important,” said Guenant. “We must also underline the high level of investment there is from French companies in the United States, and vice versa.”
Looming U.S. tariffs have a strong element of déjà vu. Under the prior Trump administration, in 2018, the president imposed customs duties of 25 percent on steel imports and 10 percent on aluminum imports. In retaliation, the EU began taxing certain product categories coming from the U.S. by 25 percent. Those included several color cosmetics segments, such as eye makeup, manicure and pedicure products, and makeup and skin care powders.
Today, duties on EU beauty products entering the U.S., and the inverse, are relatively low, at roughly 5 percent.
“That is why a sudden increase will have consequences on suppliers, on the final consumer price, on the margins of American distributors, etcetera,” said Guenant.
“It’s really a non-escalation — the message that we are effectively pushing,” said Marie Audren, director of public affairs and communication at FEBEA.