How New US Tariffs Could Impact the Australian Beauty Industry

Last week, President Trump announced a series of new tariffs on goods entering the United States. The announcement outlined increased rates on imports from a wide range of countries, including Australia, the EU, China, Japan, and more.

A 10% tariff set as the new baseline rate for most countries – including Australia.

Like many industries, the professional beauty industry is expected to feel the effects of this announcement. Given that a significant portion of beauty products sold in Australia are manufactured overseas (particularly in Europe, China, Japan, South Korea, and Southeast Asia) Australian beauty brands and distributors could be significantly impacted by these tariffs when exporting to the US.

These changes will affect multiple stages of the retail supply chain, including:

• Manufacturing Costs: Brands that source raw ingredients, packaging, or finished goods from impacted regions could face higher input costs if they intend to export to the US market.

• Shipping and Logistics: Increased tariffs could mean higher customs duties at US ports, adding to freight and handling costs for Australian businesses shipping beauty products to America.

• Wholesale Pricing: Distributors may need to absorb or pass on, some of the tariff costs or raise their wholesale prices, affecting their competitiveness in the US market.

• Retail Margins: To maintain profitability, Australian beauty brands may need to increase their retail prices in the US - which could, in turn, affect client/consumer demand.

• Market Expansion Strategies: For brands planning US market entry or growth, the added cost burden could delay launches, alter pricing models, or require a reassessment of go-to-market strategies.

Australian beauty businesses must also consider the potential consequences for trade, export pricing, and supply chain logistics. This development adds another layer of complexity for Australian beauty brands looking to expand into or maintain their presence in the US market.

These tariffs could make Australian-made and distributed beauty products less competitively priced in the US compared to American-made alternatives, and may influence strategic decisions around product sourcing, manufacturing, and international expansion.

Here’s a summary of the new tariffs introduced by President Trump:

• A minimum 10% tariff will apply to most countries, including Australia, the UK, Argentina, and Saudi Arabia. It’s scheduled to take effect from 5 April.

• 60 countries are facing higher tariffs considered ‘reciprocal’ by the US administration, including:

  • European Union: 20%

  • China: 54%

  • Japan: 24%

  • South Korea: 25%

  • India: 26%

  • Thailand: 36%

  • Taiwan: 32%

• Mexico and Canada are already facing 25% tariffs with some exceptions.
  

There are ongoing questions around rules of origin, and how the tariffs will apply in practical terms - particularly whether they include existing tariffs or are additional. We hope that the professional beauty industry bodies are consulting with government officials for further clarification, and as for Australian businesses, you should stay informed as updates become available.