U.S.-Canada cosmetic tariffs threaten the $10 beauty impulse buy

The concern for the industry is less about one eyeshadow or lipstick becoming more expensive than the effect that tariffs have on an integrated North American supply chain. Photo by Bing Guan/Bloomberg

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In between offering advice on how to find the best towels and where to buy affordable versions of high-end garments, Bryce Gruber recently waded into the United States-Canada trade war, warning her social-media followers that some of their favourite makeup is about to get more expensive.

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Cosmetics — along with tulip bulbs, winter jackets and wooden frames — are among the hundreds of Canadian products hit with a new 50 per cent tariff by the U.S. after trade talks between the two countries broke down. Canada in turn hit certain U.S. makeup imports with 50 per cent retaliatory tariffs on Tuesday, with those set to take effect Sept. 8.

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On both sides of the border, shoppers may get squeezed.

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Last week, ahead of a deadline in the trade talks, Gruber, a women’s lifestyle influencer and shopping editor, pointed out that many popular makeup products are made in Canada and shipped to the U.S.

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“A good chunk of L’Oreal products are coming out of Canada,” Gruber said in a video posted to Instagram and TikTok. “Remember L’Oreal owns a ton of different brands, not just the affordable drugstore stuff.”

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L’Oreal SA and The Estee Lauder Cos. are among the major beauty companies exposed to the latest tariffs through their Canadian manufacturing operations, according to people with knowledge of the matter who asked not to be named discussing private information.

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Estee Lauder owns M.A.C. Cosmetics Inc. and Deciem Inc., the company behind affordable skincare brand The Ordinary. And the Canadian subsidiary of L’Oreal has 39 brands in its portfolio, more than 1,700 employees and several locations, including a factory and distribution centre in Quebec, according to its website.

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“People are very interested in products that work very well, but are not expensive. And who is dominating that right now? L’Oreal,” Gruber said in an interview. She also pointed out that The Ordinary has become a beauty “hero” owing to its simple skincare formulations at a low price.

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Tariffs don’t automatically translate to price hikes, but 50 per cent duties become difficult for companies to absorb. “If there’s a 50 per cent tariff, you’re no longer looking at a $10 impulse purchase,” Gruber said. “For the average American woman that becomes a, ‘I don’t know if I need it.’”

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Even when companies absorb some or all of the tariffs rather than raising prices, the levies alter the economics of selling cosmetics across the border and may force changes to pricing, manufacturing and distribution.

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A representative for Estee Lauder declined to comment, while L’Oreal did not respond to requests for comment.

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Highly Integrated

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The broader concern for the industry is less about one eyeshadow or lipstick becoming more expensive than the effect that tariffs have on an integrated North American supply chain.

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After South Korea, Canada was the second-largest source of beauty and skincare imports to the U.S. last year, according to data from the U.S. International Trade Commission. The Canadian sector includes major U.S. brands as well as domestic manufacturers.