Affordable cosmetics brand e.l.f. Beauty faces a significant challenge as economic policies under the Trump administration test its reliance on Chinese manufacturing. With approximately 75% of its products sourced from China, e.l.f. finds itself increasingly vulnerable to tariff-related price increases. This predicament stems from tariffs imposed during Trump’s presidency, including a 25% duty on Chinese imports established in 2019 and more recent tariffs that, in total, equate to a staggering 55%.
As the beauty sector navigates the complexities of international trade disputes, e.l.f. Beauty’s commitment to its Chinese supply chain presents both an advantage and a potential risk. CEO Tarang Amin emphasized the competitive edge e.l.f. has cultivated over the past two decades, stressing that the established relationships with Chinese suppliers are integral to maintaining quality, cost-effectiveness, and speed in a fiercely competitive industry. During a recent earnings call, Amin stated, “We believe our unique China-based supply chain is an area of competitive advantage we’ve been honing for the past 21 years. It underpins our value proposition.”
However, the tariff situation complicates e.l.f.’s longstanding strategy of providing cost-effective cosmetic solutions. In response to escalating costs, the company recently announced a $1 price increase on all products, a move that signals the extent of financial strain caused by tariffs. In a discussion with Yahoo Finance, Chief Financial Officer Mandy Fields indicated that the company is exploring multiple avenues for tariff mitigation beyond just pricing adjustments. Fields remarked, “There’s just such a range of outcomes from a tariff perspective. I would say pricing is one lever that we have in our toolkit, but we’re also looking at our supply chain to optimize that, and also looking at business diversification.”
To further diversify and adapt to shifting market dynamics, e.l.f. recently acquired Rhode, a direct-to-consumer skincare brand founded by celebrity Hailey Bieber, for $1 billion. This acquisition is seen as a strategic move to broaden e.l.f.’s product portfolio while also reducing its dependency on Chinese manufacturing—a goal resonating across the broader beauty sector. Following the announcement, shares of e.l.f. Beauty surged by 23%, reflecting investor confidence in the company’s strategic pivot.
Many beauty enterprises are reassessing their supply chains in light of tariff pressures, emphasizing the importance of supplier efficiency. Entrepreneurs like Alicia Yoon, founder of the Korean beauty brand Peach & Lily, caution against cost-cutting measures that might compromise product quality. Speaking at the 2025 Beauty CEO Summit, Yoon stated, “It’s very tempting to say, ‘OK, this ingredient, let’s swap it out for something that’s basically the same,’ but that can impact quality.”
In 2024, the United States imported approximately $671.4 million worth of makeup and skincare products from China, highlighting the significant economic ties between these industries. However, recent data suggests a substantial decline in imports, with shipments to the Port of Los Angeles anticipated to be 36% lower than the previous year due to ongoing trade disputes, which may significantly affect smaller brands as they grapple with the dual challenges of rising costs and reduced access to foundational raw materials.
L’Oréal’s CEO Nicolas Hieronimus has acknowledged the pressure that tariffs impose on the beauty industry, particularly noting the distinct advantages held by brands that have minimized their exposure to Chinese imports. His comments during an April sales update highlighted e.l.f.’s situation when he remarked that while some brands face the brunt of tariffs with as much as 80% of their products sourced from China, e.l.f. could benefit from its comparatively lower dependency. “We know that some of our very direct competitors are closer to 80%,” Hieronimus added, hinting that as tariffs become more entrenched in U.S. policy, companies like e.l.f. could face an increasingly competitive landscape.
In light of these pressures, e.l.f. has projected an annualized cost impact of $50 million due to the current tariff levels, raising questions about the future of its pricing strategy and potential market share. Despite these challenges, e.l.f. has continued to expand, reporting a 28% increase in net sales during the fiscal fourth quarter and ongoing gains in market share.
The company remains optimistic about the future, with Amin asserting that e.l.f.’s strategy is robust enough to drive sustained category leadership in sales and market share growth. The acquisition of Rhode is seen as a pivotal step in navigating the complexities of the current economic landscape while diversifying its portfolio with disruptive brands—a strategy that could provide a buffer against evolving market pressures and consumer preferences.
As the global beauty industry continues to evolve within the context of shifting tariff landscapes and international trade relations, companies are re-evaluating their operational models. The outcome of these changes could have lasting implications on pricing, product quality, and consumer access to affordable beauty products. As e.l.f. Beauty, and indeed the entire cosmetic community, work through these multifaceted challenges, the stakes have never been higher in maintaining competitiveness while delivering value to consumers.