Impending changes are at the top of minds as we face the new year. Shortly into 2025, the United States will see a new president take office, Donald Trump, for a second term to be exact. With the discomfort and uncertainty this new administration and economic landscape is sure to usher in, it causes many industries to question how their bottom lines may be affected. Leading into the inauguration, the beauty industry, among others, is reckoning with how these changes may alter the way it conducts business.
A large source of speculation lies in the tariff proposal the incoming president promises to impose, particularly on the rest of North America and China. In an attempt to centralize more business domestically and “crack down” on immigration and drug trade, Trump plans to impose a series of tariffs and taxes on imports, which if implemented will cause a ripple effect for many businesses whose infrastructure is supported by international manufacturers. The modern beauty business in particular is made possible through a global network of international beauty brands, partnerships, and business ecosystems, which may see additional obstacles should these tariffs go into effect.
Many consumers are concerned that the beauty products that make up their beloved routines will be less accessible, financially and physically. This change will significantly alter consumer access to beauty as well as the state of the industry as it stands in the United States and abroad. To understand the current landscape and what shifts beauty professionals anticipate, Beautycon tapped a few beauty brand insiders to learn more.
Michelle Liu, General Manager of Half Magic Beauty, the beauty brand helmed by celebrity makeup artist Donni Davy, offers some initial insight on what may come from a brand perspective.
“The real challenge of these new potential tariffs is that they can dramatically change the cost structure of products without a tangible, visible benefit to the consumer; the same item simply costs more to make – sometimes as much as 25-50% more. Brands are forced to absorb a lot of that because the end consumer won’t accept such dramatic changes in prices. Ultimately this affects a brand’s ability to re-invest profits in growth or in some cases, the quality of future innovation,” Liu outlines.
While brands anticipate higher costs and innovative ways to make ends meet, consumers are equally concerned about the effect on their budgets. According to PBS, economists find that consumers are most directly impacted by tariffs because, without prior infrastructure in place, the market cannot sustain these drastic changes and therefore end up pricing out the consumer. Though industries such as agriculture are anticipated to be affected the most, all industries including beauty will face economic strains, oftentimes to unsubstantial long term benefit.
To gain an international perspective, Beautycon sat down with Mitchell Halliday, MUA and founder of the inclusive, UK-based beauty brand Made By Mitchell. In a similar vein to Liu’s, Halliday touches on the potential of smaller or independently owned businesses’ inability to keep up with the rising market prices.
“I think it’s probably going to be a time where a lot of people’s strategies evolve, or really figure out if being global is sustainable for them in that moment,” he muses.
This new trade proposition comes at an interesting time, as the Made by Mitchell brand is gearing up for global expansion in 2025, including a launch within a large U.S. retailer. Prior to the November 2024 election results, the brand’s planning phase included building out American-based infrastructures for their U.S. locations. Halliday is hopeful that local operations will assist in adjusting to potential shifts in trade and economic regulations.
On the other hand, while products may be manufactured domestically, ingredients in said products can be sourced elsewhere which in turn would increase the price of the product overall. Take cosmetic chemist Javon Ford’s TikTok video for example, where he discusses the potential price increase for both product makeup and packaging. Through one cause or another, consumers and businesses alike are likely to face higher economic hardship as a result.
From an international business standpoint, Halliday calls attention to the importance of centering other global audiences during this time. “As a beauty brand, it’s really important for me not to just put all my eggs into America’s basket. It’s about growing and keeping my eyes open to the rest of the world as well.”
Approaching this topic from a social perspective, Halliday believes it will also be an important time for brands and beauty influencers to be certain in their convictions. As younger generations, Gen Z to be exact, have already demonstrated how influential brand messaging and ethos can be to their financial decisions, they may very well be more selective with who they share their patronage with. Amidst the changing standards, misinformation, and blatant attacks on certain identity-based groups, figures in the beauty space may have to be more forthcoming with their positions as to not alienate their audiences. Taking it a step further, if the potential U.S.- TikTok ban comes to fruition, it will drastically affect brands and influencers’ ability to market and increase brand awareness in the beauty space as well.
An additional factor to consider within this conversation is the Lipstick Effect: an economic trend coined by Estee Lauder in 2001 wherein consumers opt for smaller, though luxury items during times of economic strife. To satiate the consumption-driven urges while experiencing economic restrictions, many rationalize small, singular purchases at premium prices. According to Forbes, the beauty industry may benefit from the lipstick effect in a way, even more so if brands focus on shifting consumer behaviors. Beauty products will shift in popularity over others due to perceived value, quality, or usage and, if brands take heed, they can leverage this shift to stay afloat.
Bottom line: we can assume the implementation of U.S. tariffs on foreign goods will come to fruition shortly after the new year. The tariffs will affect the beauty industry from production to shelf pricing and cause beauty consumers to shift shopping behavior. As we observe how the economic landscape of the next several years will unfold, anticipating consumer trends will be crucial for businesses to stay afloat.