Affordable cosmetics company e.l.f. Beauty (ELF) has long relied on China to keep its prices low and create value-oriented “dupes” of higher-end products.
Now, President Trump’s economic agenda is putting that model to the test.
E.l.f. sources 75% of its products from China, making it highly exposed to higher costs from Trump’s tariffs (though less so than in 2019, when the company sourced 100% of its products from the country).
In addition to the broad-based tariffs Trump has levied in his second term, e.l.f. faces a 25% tariff on its China-sourced products that Trump levied in 2019. With the most recent 30% tariffs that Trump imposed on Chinese goods, which are undergoing legal scrutiny, e.l.f.’s product imports to the US were subject to tariffs at the 55% level.
Unlike other companies that have vocally pivoted to American onshoring to avoid being singled out by the president, CEO Tarang Amin said on the company’s earnings call that e.l.f. remains committed to its Chinese suppliers.
“We believe our unique China-based supply chain is an area of competitive advantage we’ve been honing for the past 21 years,” Amin said. “It underpins our value proposition, delivering the best combination of quality, cost, and speed in our industry. We’re … committed to our China team and suppliers.”
But tariffs create a challenging situation for a company that prides itself on its affordability factor.
E.l.f. recently took a rare step in announcing a $1 price increase on all items starting in August. In an interview with Yahoo Finance on Thursday, e.l.f Beauty CFO Mandy Fields did not say whether e.l.f. would pare back prices if tariffs were to come off.
“There’s just such a range of outcomes from a tariff perspective,” Fields said (see video above). “I would say pricing is one lever that we have in our toolkit, but we’re also looking at our supply chain to optimize that, and also looking at business diversification as we think about tariff mitigation.”
The beauty company also announced the acquisition of Rhode, a direct-to-consumer skin care brand founded by Hailey Bieber, for $1 billion. One of the reasons given for the deal was to help e.l.f. diversify its supply chain away from China.
E.l.f. Beauty stock soared 23% on Thursday following the announcement.
Smaller cosmetic brands ‘have been relying a lot on China’
Many beauty brands are going back to the drawing board in hopes of finding ways to deal with tariffs, starting by reaching out to their suppliers and finding new efficiencies.
Alicia Yoon, the founder of Korean beauty brand Peach & Lily, also warned about the dangers of cost-cutting too much to offset duties.
“It’s very tempting to say, ‘OK, this ingredient, let’s swap it out for something that’s basically the same, or find a new supplier that’s more affordable,'” Yoon told WWD at the 2025 Beauty CEO Summit, adding, “But that can impact quality.”
In 2024, China shipped $671.4 million worth of makeup and skin care products to the United States. For the week ending May 10, incoming shipments to the Port of Los Angeles are expected to be roughly 36% lower than the previous year, largely due to ongoing trade disputes.
Read more: What Trump’s tariffs mean for the economy and your wallet
Tariffs could be a huge issue for smaller cosmetic brands in particular, L’Oréal (OR.PA) CEO Nicolas Hieronimus said during a sales update in April.
In a nod to e.l.f., Hieronimus hinted that its inexpensive NYX Cosmetics brand was in a better position than its competitors, as it reduced its exposure to Chinese-imported products to around 20%, “which is not nothing, but it’s only 20%,” he said.
“We know that some of our very direct competitors are closer to 80%,” Hieronimus added. “So at some point … [if] the tariffs against China are confirmed and stand, it will indeed benefit some of our brands — and makeup in particular.”
At the current China tariffs level, e.l.f. reported on Wednesday that it expects a $50 million annualized cost impact. The growing beauty company continued to gain market share in its fiscal fourth quarter and grew net sales by 28%.
“We believe we have the right strategy to drive continued category-leading sales and market share growth in the years to come, and believe the acquisition of Rhode will further strengthen and diversify our portfolio of fast-growing disruptive brands,” e.l.f. CEO Amin said.
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