European Cosmetics Sector Pursues Exemption from Trade War Tariffs
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 beauty powerhouse valued at around one hundred eighty-eight billion euros, has officially asked the European Union to remove the beauty industry from its proposed retaliatory tariffs against the United States.
This request arises amidst escalating trade tensions in the luxury and consumer goods sectors.
In March, L'Oréal's CEO indicated that the company is ready to adjust to any imposed tariffs, emphasizing its pricing power and beneficial currency conditions due to the robust US dollar.
He pointed out that while tariffs can be managed, they shouldn’t be integrated into a reciprocal trade policy.
Following this statement, L'Oréal formed a coalition of fifteen beauty companies to formally urge the European Commission to exclude the beauty sector from its draft list of targeted American imports.
The EU had prepared a ninety-nine-page document detailing potential tariff targets, which were initially slated to begin on April 1. However, the European Commission postponed the implementation until April 13 to facilitate additional diplomatic discussions with the United States.
The French spirits sector, which is facing potential US tariffs as high as two hundred percent, also supported the call for a delay.
France’s cosmetics industry association has pushed back against new tariffs, presenting trade statistics that reveal France imports about five hundred million euros in American cosmetics each year while exporting roughly two and a half billion euros in personal care goods to the US. The wider European cosmetics sector is responsible for approximately two million jobs throughout the continent.
Despite L'Oréal producing about two-thirds of its products sold in the US locally, company insiders suggest that its fragrance and scented product divisions are particularly at risk from tariffs.
A downturn in these segments could adversely affect the company's financial performance, which is already being pressured by declining consumer confidence in China.
China is a crucial market for the global cosmetics sector.
With its growing middle class, it has now become the world’s second-largest market for beauty products, following the United States.
L'Oréal has reported decreasing sales in China for multiple quarters: down six point five percent in Q3 2024, three point six percent in Q4, and an overall decrease of about four percent for the entire year.
China comprises roughly seventeen percent of the company’s total sales.
In contrast, US sales rose by only one point four percent in 2024.
Over the past year, L'Oréal’s stock price has fallen by around nineteen percent after several years of growth during the COVID-19 period, which was partly fueled by an increased demand for premium cosmetics.
Despite the recent decline, the shares have appreciated forty-eight percent over the last five years.
In 2024, L'Oréal achieved annual revenues of forty-three point four eight billion euros, reflecting a five point six percent increase from the previous year.
Net income reached six point four one billion euros.
In comparison, Estée Lauder, its American competitor, is currently valued at about twenty-four billion US dollars.
The New York-listed rival has experienced a share price drop of approximately fifty-seven percent over the past five years, including a fifty-two percent decline in just the last year.
L'Oréal's strong performance has made it a significant holding for numerous prominent investment funds.
One key supporter is Terry Smith, a well-known UK investor whose fund manages thirty-six billion pounds in assets.
The cosmetics industry’s request for exemption, similar to that of the spirits industry, has faced public backlash.
Critics argue that excluding luxury products from the EU’s trade response shows a detached perspective, particularly in light of the ongoing economic tensions stemming from the previous US administration.
This request arises amidst escalating trade tensions in the luxury and consumer goods sectors.
In March, L'Oréal's CEO indicated that the company is ready to adjust to any imposed tariffs, emphasizing its pricing power and beneficial currency conditions due to the robust US dollar.
He pointed out that while tariffs can be managed, they shouldn’t be integrated into a reciprocal trade policy.
Following this statement, L'Oréal formed a coalition of fifteen beauty companies to formally urge the European Commission to exclude the beauty sector from its draft list of targeted American imports.
The EU had prepared a ninety-nine-page document detailing potential tariff targets, which were initially slated to begin on April 1. However, the European Commission postponed the implementation until April 13 to facilitate additional diplomatic discussions with the United States.
The French spirits sector, which is facing potential US tariffs as high as two hundred percent, also supported the call for a delay.
France’s cosmetics industry association has pushed back against new tariffs, presenting trade statistics that reveal France imports about five hundred million euros in American cosmetics each year while exporting roughly two and a half billion euros in personal care goods to the US. The wider European cosmetics sector is responsible for approximately two million jobs throughout the continent.
Despite L'Oréal producing about two-thirds of its products sold in the US locally, company insiders suggest that its fragrance and scented product divisions are particularly at risk from tariffs.
A downturn in these segments could adversely affect the company's financial performance, which is already being pressured by declining consumer confidence in China.
China is a crucial market for the global cosmetics sector.
With its growing middle class, it has now become the world’s second-largest market for beauty products, following the United States.
L'Oréal has reported decreasing sales in China for multiple quarters: down six point five percent in Q3 2024, three point six percent in Q4, and an overall decrease of about four percent for the entire year.
China comprises roughly seventeen percent of the company’s total sales.
In contrast, US sales rose by only one point four percent in 2024.
Over the past year, L'Oréal’s stock price has fallen by around nineteen percent after several years of growth during the COVID-19 period, which was partly fueled by an increased demand for premium cosmetics.
Despite the recent decline, the shares have appreciated forty-eight percent over the last five years.
In 2024, L'Oréal achieved annual revenues of forty-three point four eight billion euros, reflecting a five point six percent increase from the previous year.
Net income reached six point four one billion euros.
In comparison, Estée Lauder, its American competitor, is currently valued at about twenty-four billion US dollars.
The New York-listed rival has experienced a share price drop of approximately fifty-seven percent over the past five years, including a fifty-two percent decline in just the last year.
L'Oréal's strong performance has made it a significant holding for numerous prominent investment funds.
One key supporter is Terry Smith, a well-known UK investor whose fund manages thirty-six billion pounds in assets.
The cosmetics industry’s request for exemption, similar to that of the spirits industry, has faced public backlash.
Critics argue that excluding luxury products from the EU’s trade response shows a detached perspective, particularly in light of the ongoing economic tensions stemming from the previous US administration.
