How beauty brands can prepare for EU tariffs

Bantara advises brands to explore alternative sourcing and localised production strategies to mitigate pricing pressures and reduce supply chain strain. Qian agrees: “Supply chains will need to be reorganised to be shorter, more localised, and ideally local within the same region.” This approach will also help larger companies buffer against geopolitical risks in areas such as Eastern Europe and the South China Sea.

However, onshoring presents challenges. “The industry relies on materials that can’t be completely sourced or replicated in the US or EU, such as Asian or African oils,” Qian explains. Additionally, strict patent protections often require certain formulations to be sourced from specific regions. Given these constraints, experts recommend that companies establish parallel supply networks (developing multiple sourcing options across different regions) to minimise dependency on any single market. Diversifying supplier partnerships and investing in regional production hubs can provide greater operational flexibility, ensuring that brands can swiftly adapt to disruptions without compromising product quality or availability.

“We may also see greater consumer and retailer interest in stocking locally made brands, particularly those that can manufacture locally and tell a compelling origin or founder story,” says beauty marketing strategist Aggie Burnett. This trend could create new avenues for local and niche brands to expand their domestic presence.

Explore new growth areas

To offset potential revenue losses, brands should invest in emerging consumer markets such as Southeast Asia, the Middle East and Africa, which have been showing strong growth in recent earnings quarters. For Bantara, tailoring product offerings and marketing strategies to regions less affected by tariff hikes, brands can tap into new consumer demand while maintaining global growth. “By nurturing trade alliances with countries offering favourable tariff conditions or free trade agreements, brands could potentially diversify revenue streams, safeguard profitability and reinforce their competitive positions against the backdrop of escalating global trade tensions,” she says.

This pivot carries operational risks, however, including stretched bandwidth and a potential dilution of brand focus. Qian suggests that brands conduct thorough market research and establish strong local partnerships before expanding. “Success in these regions depends on nuanced cultural insights and a deep understanding of local consumer preferences,” she explains.

US and EU retailers could also gain better control by doubling down on their private-label products. “As prices hike, a significant portion of consumers, especially younger demographics, are becoming sensitive to price, so the pressure will prompt them to explore affordable alternatives,” says Bantara. But Antonella Colella, founder and managing partner of Colella Legal Studio, a trademark law firm, warns retailers to approach with caution. “Developing and expanding private labels is an option, but it’s highly dependent on costs. Retailers can lean into the category but only if they can control production and manufacturing costs; otherwise, they will come up against the same challenges as brands,” she says. The smart move? “Retailers need to be nimble. Expect a mix of price adjustments, promotions, pivots towards local brands and striking the right balance when stockpiling on strong performance brands — it’s a gamble,” Colella says.

Strengthening direct-to-consumer (DTC) and e-commerce platforms can help brands maintain competitive pricing and secure higher margins (compared to the tighter margin squeeze expected from retail price hike fallout) while deepening relationships with their core customer base. “DTC will get scrappy and strategic,” says Burnett. “Brands shouldn’t default immediately to discounting. Instead, they should lean into their brand storytelling, values and VIP perks to maintain perceived value and keep retention high.” Focusing on DTC efforts now will also help brands brace for potential price increases further down the line while building a stronger, more engaged community of loyal customers.

The next few months will be pivotal as brands prepare for potential trade tensions while staying true to their values and maintaining customer trust. But, as Qian says, “brands that act with agility, strengthen supply chains, explore new growth avenues and maintain a commitment to innovation will weather the storm.”

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