Affordable cosmetics company Elf Beauty (ELF) has long relied on China to keep its prices low and created a “deception” of value-oriented high-end products.
Now, President Trump’s economic agenda puts that model into practice.
ELF resources come from 75% of China, making it highly bear Trump’s tariff costs (although compared to 2019, the company sourcing 100% of its products from the country).
In addition to the widespread tariffs imposed during Trump's second term, the Chinese products imposed by Trump in 2019 also face 25% tariffs. Trump's recent 30% tariffs on Chinese goods are under legal scrutiny, with ELF's products being imported to the United States at 55%.
Unlike other companies that have an open spin to avoid being picked by the president, CEO Tarang Amin said on the company’s revenue call that the Elf is still committed to its Chinese suppliers.
“We believe that our unique Chinese supply chain is an area of competitive advantage that has been honed over the past 21 years,” said Amin. “It supports our value proposition and provides the best combination of quality, cost and speed in our industry. We… are committed to our Chinese team and suppliers.”
But tariffs create a challenging situation for companies that pride themselves on their affordability.
The Elf recently announced a $1 increase in the price of all items in August, taking a rare step. In an interview with Yahoo Finance on Thursday, Elf Beauty CFO Mandy Fields did not disclose whether Elf would lower the price if the tariffs were to be reduced.
“From a tariff perspective, there are a range of results,” Fields said. “I would say pricing is a kind of leverage we have in the toolkit, but we are also looking at the supply chain to optimize it and diversify our business when considering reducing tariffs.”
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 for this deal is to help the elves diversify their supply chains from China.
Elf beauty stocks surged 23% on Thursday after the announcement.
Many beauty brands are returning to drawing boards in an effort to find ways to deal with tariffs, first contacting suppliers and finding new efficiencies.
Alicia Yoon, founder of Korean beauty brand Peach & Lily, also warned that too much cost cuts are needed to offset the danger of responsibility.
"Okay, 'ok,'ok,'ok,'ok, here's the ingredient, let's swap it for something basically the same, or find a new vendor that's more affordable," Yoon told WWD at the 2025 Beauty CEO Summit.
In 2024, China shipped $671.4 million worth of cosmetics and skin care products to the United States. In the week ending May 10, cargo at the port of Los Angeles is expected to be about 36% lower than the previous year, mainly due to ongoing trade disputes.
Read more: What Trump’s tariffs mean to the economy and your wallet
Tariffs for small cosmetic brands in particular can be a huge problem, L'Oréal (OR.PA) CEO Nicolas Hieronimus said in an April sales update.
Hieronimus pays homage to the Elf, suggesting that its cheap NYX Cosmetics brand is better positioned than its competitors as it reduces its exposure to Chinese imported products to around 20%, but that's not nothing, but only 20%. ”
"We know that some very direct competitors are close to 80%," Hieronimus added. "So, at some point... if the tariffs on China are confirmed and stanced, it will really benefit some of our brands, especially makeup."
The ELF reported on Wednesday that at current Chinese tariff levels, the annual cost is expected to have a $50 million impact. The growing beauty company continues to gain market share in its fourth quarter and has increased net sales by 28%.
“We believe we have the right strategy to drive category-leading sales and market share growth in the coming years and believe that the acquisition of Rhode will further enhance and diversify our rapidly growing disruptive brands,” said Elf CEO Amin.
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