European Cosmetics Sector Seeks Waiver from Trade War Duties
L'Oréal spearheads the industry's effort to remove beauty products from the EU's retaliation list amid rising trade tensions with the US.
L'Oréal, the French cosmetics behemoth valued at roughly one hundred eighty-eight billion euros, has officially urged the European Union to exclude the beauty industry from its proposed retaliatory tariffs against the United States.
This request arises amid escalating trade frictions affecting the luxury and consumer goods sectors.
In March, L'Oréal’s CEO expressed that the company is ready to adjust if tariffs are enacted, highlighting the advantages of pricing power and favorable currency conditions thanks to the robust US dollar.
He emphasized that although tariffs can be navigated, they should not become part of an exchange of trade measures.
Following this declaration, L'Oréal formed a coalition of fifteen beauty companies to officially approach the European Commission to advocate for the removal of the beauty sector from its draft list of targeted American products.
The EU had created a ninety-nine-page document detailing potential tariff targets, which were initially set to be implemented on April 1. However, the European Commission postponed the execution until April 13 to facilitate further diplomatic discussions with the United States.
The French spirits industry, facing the prospect of US tariffs as high as two hundred percent, also supported the postponement.
France’s cosmetics industry association has opposed new tariffs, citing trade statistics that show France imports about five hundred million euros' worth of American cosmetics each year, while exporting around two and a half billion euros in personal care items to the US. The larger European cosmetics industry supports approximately two million jobs throughout the continent.
While L'Oréal produces about two-thirds of its products sold in the US domestically, company insiders reveal that divisions associated with fragrances and scented items are particularly susceptible to tariffs.
A slowdown in these areas could adversely affect the company’s financial results, which are already strained by declining consumer confidence in China.
China remains a crucial market for the global cosmetics sector.
With a growing middle class, it is currently the second-largest market for beauty products worldwide, following the United States.
L'Oréal has reported falling sales in China over several quarters: a decline of six point five percent in Q3 2024, three point six percent in Q4, and an overall drop of around four percent for the entire year.
China represents about seventeen percent of the company's total revenue.
In contrast, US sales saw a modest increase of just one point four percent in 2024.
Over the past year, L'Oréal's stock has fallen by nearly nineteen percent after years of gains during the COVID-19 pandemic, which was partly fueled by a surge in demand for premium cosmetics.
Despite the recent downturn, the stock has appreciated by forty-eight percent over the last five years.
In 2024, L'Oréal achieved annual revenues of forty-three point four eight billion euros, marking a five point six percent increase year over year.
Net profits reached six point four one billion euros.
In comparison, its American competitor Estée Lauder is currently valued at about twenty-four billion US dollars.
The New York-listed firm has experienced a share price decline of around fifty-seven percent over the last five years, including a fifty-two percent drop in just the past year.
L'Oréal’s performance has positioned it as a vital asset for numerous prominent investment funds.
One notable advocate is Terry Smith, a well-known investor based in the UK, whose fund oversees thirty-six billion pounds in assets.
The cosmetics industry's appeal for exclusion, similar to that of the spirits industry, has attracted public scrutiny.
Critics contend that exempting luxury items from the EU’s trade response represents a disjointed perspective, particularly in light of the ongoing economic tensions initiated by the previous US administration.
This request arises amid escalating trade frictions affecting the luxury and consumer goods sectors.
In March, L'Oréal’s CEO expressed that the company is ready to adjust if tariffs are enacted, highlighting the advantages of pricing power and favorable currency conditions thanks to the robust US dollar.
He emphasized that although tariffs can be navigated, they should not become part of an exchange of trade measures.
Following this declaration, L'Oréal formed a coalition of fifteen beauty companies to officially approach the European Commission to advocate for the removal of the beauty sector from its draft list of targeted American products.
The EU had created a ninety-nine-page document detailing potential tariff targets, which were initially set to be implemented on April 1. However, the European Commission postponed the execution until April 13 to facilitate further diplomatic discussions with the United States.
The French spirits industry, facing the prospect of US tariffs as high as two hundred percent, also supported the postponement.
France’s cosmetics industry association has opposed new tariffs, citing trade statistics that show France imports about five hundred million euros' worth of American cosmetics each year, while exporting around two and a half billion euros in personal care items to the US. The larger European cosmetics industry supports approximately two million jobs throughout the continent.
While L'Oréal produces about two-thirds of its products sold in the US domestically, company insiders reveal that divisions associated with fragrances and scented items are particularly susceptible to tariffs.
A slowdown in these areas could adversely affect the company’s financial results, which are already strained by declining consumer confidence in China.
China remains a crucial market for the global cosmetics sector.
With a growing middle class, it is currently the second-largest market for beauty products worldwide, following the United States.
L'Oréal has reported falling sales in China over several quarters: a decline of six point five percent in Q3 2024, three point six percent in Q4, and an overall drop of around four percent for the entire year.
China represents about seventeen percent of the company's total revenue.
In contrast, US sales saw a modest increase of just one point four percent in 2024.
Over the past year, L'Oréal's stock has fallen by nearly nineteen percent after years of gains during the COVID-19 pandemic, which was partly fueled by a surge in demand for premium cosmetics.
Despite the recent downturn, the stock has appreciated by forty-eight percent over the last five years.
In 2024, L'Oréal achieved annual revenues of forty-three point four eight billion euros, marking a five point six percent increase year over year.
Net profits reached six point four one billion euros.
In comparison, its American competitor Estée Lauder is currently valued at about twenty-four billion US dollars.
The New York-listed firm has experienced a share price decline of around fifty-seven percent over the last five years, including a fifty-two percent drop in just the past year.
L'Oréal’s performance has positioned it as a vital asset for numerous prominent investment funds.
One notable advocate is Terry Smith, a well-known investor based in the UK, whose fund oversees thirty-six billion pounds in assets.
The cosmetics industry's appeal for exclusion, similar to that of the spirits industry, has attracted public scrutiny.
Critics contend that exempting luxury items from the EU’s trade response represents a disjointed perspective, particularly in light of the ongoing economic tensions initiated by the previous US administration.
