Assessing the Tariff Damage on Beauty Packaging

A rising tide may lift all boats, but the same can’t be said for rising tariffs.

Beauty brands are bracing themselves for steep increases in packaging costs after the U.S. slapped 125 percent tariffs on China last week, where a large chunk of key components are manufactured.

Industry experts cautioned that such a move will leave brands with little choice but to raise retail prices at a time when the consumer is pulling back amid an uncertain and increasingly chaotic economic backdrop – and it will be smaller brands that struggle the most.

“Tariffs on empty packaging produced in China and delivered to the U.S. – where the formula is filled – will be the highest for our business,” said Denis Maurin, president of sales and innovation at HCT, a subsidiary of Kdc/one. 

“The consequence of all those tariffs is that brands in our industry and many other sectors will probably have to raise their retail price,” he continued. “Consumers will probably slow down on purchases with such high potential price increases, and we might see slower activity in terms of reorders and new development/launches. Some brands might even want to pause for a couple of weeks and not place reorders until the U.S. stabilizes their tariffs and finishes negotiations with various countries.”

Maurin said moving the filling and packaging to another country “could be a faster and more efficient solution.” 

“While we think the situation will improve with most countries as negotiations take place, we hope that the tariff situation between the U.S. and China will not escalate even more. Otherwise, we will get very quickly into a deeper economic crisis, where everybody will suffer,” he said.

David Chung, founder and chief executive officer of hair brand The Rootist, Mahwah, N.J.-based contract manufacturer iLabs, and Morae Packaging, which manufactures in South Korea, said the impact on beauty will be significant. 

“One component on my bottles for The Rootist now has an almost 140 percent duty. And for our aluminum bottles, there are very few places to buy them that make them in the U.S., and if you can find them, it’s going to cost four times more than I’m paying from China anyways,” he said.

“We’re thinking about increasing the retail price as soon as May 1 or June 1,” Chung said of his own brand. “I already got the new bill for the new tariffs.” 

Chung isn’t the only one: Foreo announced it would be raising prices between 20 percent and 30 percent Thursday. 

While Foreo is a Swedish brand, headquartered in Stockholm and operating globally, its manufacturing is based in China. The 125 percent tariff recently added to Chinese imports, on top of previous tariffs, brings the total tariff impact on Foreo products to a range between 137 percent and 151 percent, depending on a product, it said. 

“This is one of the most aggressive tariff hikes we’ve seen in years,” said Mario Gomez, global commercial director at Foreo. “At 130 percent, it fundamentally reshapes the cost of bringing our products into the U.S. Still, our first priority is our customer — which is why we’re capping our price adjustment well below the actual tariff burden. This is not the message we wanted to deliver but we believe transparency and fairness are vital right now. Our mission remains the same: to make self-care accessible, empowering, and effective for everyone.”

In the recent past, the beauty packaging industry has grappled with other tariffs, most notably when President Donald Trump, during his first term in 2018, began applying 25 percent tariffs on products made in China and imported to the U.S.

According to sources, larger conglomerates are better poised to weather the storm, given how diversified their supply chains are.

“Many European beauty multinationals already have operations on U.S. soil. Beiersdorf, for instance, counts about one-third of its products sold in the U.S. being manufactured locally, and about two-thirds are sourced from outside the U.S., especially from Mexico,” said Stifel equity research analyst Rogerio Fujimori in a note to investors.

“L’Oréal has five factories in North America, with two-thirds of products sold in the U.S. being manufactured in the U.S.,” the note continued, and “About 15 percent of U.S. sales are imported from France. These sales relate to Luxe products [are] enjoying good pricing power to manage the margin headwinds from higher tariffs.”

Baralan, the Milan-based packaging supplier, has a large enough presence that it won’t feel the impacts immediately.

“We’ve invested in the U.S., we have offices, we have warehouses, and we have invested in facilities,” said Caroline Baranes, Baralan’s chief business officer. “We’re able to sustain our customers with stock, with facilities, and we’re close to them.”

As for rising retail prices, Oliver Chen, an analyst at TD Cowen, expects the mass market – which is already challenged in the U.S. – to take a bigger hit than luxury products. E.l.f. Beauty, for example, has roughly 80 percent of its products coming from China.

“Price increases are going to be interesting to watch, because nobody can just apply them to everything. You need to think about where in your portfolio you can afford to raise the price that you won’t see many unit declines, and where you should shrink your packaging. It’s somewhat obvious, but it’s hard,” Chen said.

Chen reasoned that beauty was also well poised to mitigate the tariffs, but would have to pull back in other areas of the business. “The industry spends a lot of money on marketing as a percentage of sales, so they can pull back on that to preserve margins,” Chen said, noting that smaller brands “don’t have the resources to compensate, or they leverage. They probably have less fixed dollars of marketing, so it’s quite sensitive.”