Global Cosmetic Industry recently highlighted how the rapid escalation of global tariffs has created an unsettling environment for businesses worldwide. As of May 19, 2025, the source reported that since the United States' announcement of tariffs in early April, the nation's weighted-average tariffs surged to more than 20% — the highest level in a century.
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Global Cosmetic Industry recently highlighted how the rapid escalation of global tariffs has created an unsettling environment for businesses worldwide. As of May 19, 2025, the source reported that since the United States' announcement of tariffs in early April, the nation's weighted-average tariffs surged to more than 20% — the highest level in a century.
These shifts have cascaded into financial market volatility and strategic turbulence for international businesses. This is especially true considering the numbers are a moving target and subject to change.
In a social media poll, Cosmetics & Toiletries (C&T) asked followers how heavily U.S. tariffs are impacting their business. Results (as of this report) were as follows:
- Significantly 30%
- Moderately 30%
- Very little (or not yet known) 40%
The "not yet knowns" are noteworthy. How are businesses supposed to navigate this uncertain terrain?
Responding to Uncertainty: Price Increases
A report by S&P Global Ratings noted on May 7 that U.S. capital goods companies could see cost increases of about 8%-10% under the U.S. tariff announcements, or a price increase of about 6%-8% to hold profits steady.
Within our industry, BASF reported, in a statement to investors, "The volatility of the tariff announcements and the unpredictability of other decisions by the United States, as well as possible countermeasures by trading partners are causing a high level of uncertainty."
The company added, "Thanks to our global strategy of serving customers through local production in their respective markets, the direct impact of the tariffs remains limited. However, indirect effects are emerging, particularly in terms of demand for our products and prices. The resulting outcome cannot yet be assessed...."
Sonneborn, another cosmetic ingredient supplier, announced its decision to raise prices on select products supplied from its Amsterdam facility by up to 10%. "This adjustment comes in response to ongoing geopolitical disruptions and uncertainties that have weakened global supply chains, leading to material shortages, shipping delays and cost surges," the company noted.
Sun Chemical additionally announced on May 5, "To address rising costs caused by recent global trade developments affecting raw material tariffs, Sun Chemical will implement a tariff surcharge on impacted color materials products, including pigments, both imported and produced in the United States."
Brian Panczyk, president of the Color Materials Division at Sun Chemical, said in a statement, "We acknowledge that this surcharge represents a significant cost increase. As the tariff situation continues to evolve, we are committed to adjusting our approach fairly while pursuing supply chain options to mitigate the tariff impact..."
On the finished goods side, E.l.f. Beauty announced a global price increase of $1 on all products, effective August 1, according to Investopedia. This decision reportedly responds to increased tariffs on Chinese imports, which have raised the company's cost of goods sold by approximately $50 million annually.
"Approximately 75% of E.l.f.’s products are manufactured in China, where a new 30% import tax, in addition to a 25% tariff from 2019, took effect on May 14," the source reported.
Transparency and Communication
Just as companies are attempting to navigate and adapt to market conditions, so too are consumers. So how can companies remain in business yet retain consumer loyalty? Transparency and communication could be the key.
The budding brand Chemist Confessions used this strategy in a recent letter to customers.
"... Amidst all of the tariff uncertainty, many have written to us asking how our skin care would be impacted. So instead of our monthly newsletter, let's talk about it!" co-founders Victoria Fu and Gloria Lu wrote.
"... Our goal since day one has been to bring honest, effective and thoughtfully formulated products to the masses. That means no cutting corners on innovative formulation, effective ingredients, quality packaging and robust manufacturing
"... However, given the volatility of the tariff situation, our brand mission becomes even more challenging. We are already seeing increasing costs in some of our materials," they continued, adding, "[r]est assured as of now, nothing has changed. We are working hard behind the scenes to maintain our affordable price point."
Fu and Lu added that their team will be "keeping a close eye on any new developments" and they will give "plenty of notice before any major changes happen [if they do]."
Innovating Under Cost Uncertainties
C&T dug little deeper into how Chemist Confessions is navigating cost uncertainties. Fu and Lu shared the following insights. As an aside, C&T reached out to multinational companies as well — they had no comment at this time.
How have the recent tariffs impacted your manufacturing costs and pricing strategies for cosmetic products? What strategies have you implemented to mitigate impacts on product pricing, supply chain and overall profitability?
We've definitely seen price increases across the board with both our domestic and international partners. This increase in raw materials, packaging and logistics is particularly challenging for small brands like us. We're focusing on cost efficiencies in our operations to help lessen the blow of all.
Are particular ingredients or components affected by tariffs more significantly? If so, which ones and how do you plan to address this?
Yes — packaging and some key active ingredients! With packaging, we're working on diversifying sourcing as much as possible. Sadly, key active ingredients we're using cannot be swapped out since many of them don't have 1:1, cost-effective replacements.
What role do you think transparency and communication with consumers play in maintaining brand loyalty during periods of pricing changes due to tariffs?
Transparency has always been crucial to our brand value and has been key to fostering continued brand loyalty. If we see potential pricing changes, we plan to simply be candid in explaining why and showcasing the steps we're taking to maintain value as best we can without impact to quality.
How do you anticipate future tariff changes will affect your product innovation and development timelines?
The impact will differ between different brands, but for us, it's pushing us even closer to our R&D roots. We're doubling down on developing truly innovative products, focusing on the best, most efficacious ingredients. Tariff-related price pressures only challenge us to produce products that truly solve need gaps and are worth the consumer's dollar and space in their daily skin care routine.
Remaining Resilient: Costs, Demand and Competitive Positioning
According to Global Cosmetic Industry, the key to resilience lies in understanding and responding to the impacts of tariffs on costs, demand and competitive positioning.
Costs and Competitive Advantage
Tariffs significantly alter business cost structures. Some firms face pressure to maintain margins amidst rising input costs, while others may capitalize on the challenges faced by competitors, emerging stronger in global markets.
Strategic leaders must:
- evaluate these shifts in cost structure carefully and
- recalibrate their pricing strategies and production approaches.
Tools such as cost reengineering and supplier renegotiations can buffer against additional cost burdens while strengthening a company's competitive edge.
Impacts on Demand
Changes in tariffs disrupt both consumer and business spending, and they vary by product type and geographical market.
Businesses must:
- assess the elasticity of demand for their products in this evolving landscape and
- align with more resilient trade corridors to find opportunities to regain sales traction despite global uncertainty.
Strategic Responses
Companies must craft proactive strategies, not just to mitigate risks but also to seize unexpected opportunities. Depending on their market positions and operational challenges, businesses can adopt one of four strategic postures:
- Accelerate growth by leveraging strong operational advantages and investing in new product development or market expansions.
- Focus on margin protection to maintain profitability in reduced demand conditions through pricing adjustments and customer loyalty programs.
- Reset cost structures to maintain competitiveness by streamlining operations, improving processes, or exiting non-essential business lines.
- Refocus efforts on markets or products with higher potential while aggressively containing costs in vulnerable areas.
The Role of Scenario Planning
Global Cosmetic Industry also emphasizes that given the volatile nature of tariff policies, scenario planning becomes essential for businesses to shape their long-term strategies.
Forward-thinking leaders should:
- Explore diverse scenarios that consider potential government actions, regulatory interventions, and competitive pressures.
- Pressure test their action plans across multiple possible outcomes to ensure they support stability and adaptability.
Moving Ahead: Mitigating Tariffs with an Eye for Opportunity
Finally, business leaders must view tariffs as more than just a threat, and instead pair their strategies to mitigate tariffs with an eye toward growth opportunities.
"Staying competitive amidst rising trade controls calls for informed decision-making grounded in thorough cost assessments, demand evaluations and strategic adaptability." Global Cosmetic Industry added.
"The ability to continuously analyze scenarios and adjust strategies will differentiate resilient businesses that thrive despite uncertainties from those who falter."
