L'Oréal spearheads efforts in the industry to keep beauty products off the EU's retaliation list as trade tensions with the US rise.
L'Oréal, the French cosmetics powerhouse valued at around one hundred eighty-eight billion euros, has officially requested that the European Union remove the beauty industry from its proposed retaliatory tariffs against the United States.
This action coincides with escalating trade conflicts affecting the luxury and consumer goods sectors.
In March, L'Oréal’s CEO mentioned that the company is ready to adjust to potential tariffs, highlighting its pricing power and advantageous currency conditions attributed to the robust US dollar.
He emphasized that while tariffs can be navigated, they should not form part of a retaliatory trade strategy.
Following this declaration, L'Oréal assembled 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 specifying potential tariff targets, which were initially scheduled to commence on April 1. However, the European Commission postponed enforcement until April 13 to facilitate further diplomatic discussions with the United States.
The French spirits sector, also facing the threat of US tariffs of up to two hundred percent, similarly sought the delay.
France’s cosmetics industry association argued against new tariffs, pointing out trade statistics that show France imports about five hundred million euros worth of American cosmetics annually while exporting around two and a half billion euros in personal care products to the US. The wider European cosmetics industry supports approximately two million jobs across the continent.
Although L'Oréal produces roughly two-thirds of the products it sells in the US domestically, company sources suggest that its fragrance and scented product divisions remain particularly susceptible to tariffs.
A downturn in these areas could affect the company's financial performance, which is already strained by declining consumer confidence in China.
China is a crucial market for the global cosmetics sector.
With a burgeoning middle class, it has become the second-largest beauty market in the world after 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 a total decrease of around four percent for the entire year.
China represents about seventeen percent of the company's overall sales.
In contrast, sales in the US increased by only one point four percent in 2024.
Over the last year, L'Oréal's stock price has fallen by approximately nineteen percent following several years of growth during the COVID-19 pandemic, fueled in part by a surge in demand for high-end cosmetics.
Despite the recent decline, the stock has appreciated by forty-eight percent over the past five years.
In 2024, L'Oréal reported annual revenues of forty-three point four eight billion euros, marking a year-over-year increase of five point six percent.
Net profit reached six point four one billion euros.
For comparison, its American competitor, Estée Lauder, currently has a market valuation of about twenty-four billion US dollars.
The New York-listed company has experienced a share price drop of roughly fifty-seven percent over the past five years, including a fifty-two percent decrease in the last year alone.
L'Oréal’s strong performance has made it a significant asset for multiple high-profile investment funds.
One of its notable supporters is Terry Smith, a prominent UK-based investor whose fund oversees thirty-six billion pounds in assets.
The cosmetics industry’s request for exemption, much like that of the spirits industry, has encountered public backlash.
Critics argue that excluding luxury items from the EU's trade response indicates a disconnected viewpoint, particularly given the ongoing economic strains initiated by the previous US administration.
This action coincides with escalating trade conflicts affecting the luxury and consumer goods sectors.
In March, L'Oréal’s CEO mentioned that the company is ready to adjust to potential tariffs, highlighting its pricing power and advantageous currency conditions attributed to the robust US dollar.
He emphasized that while tariffs can be navigated, they should not form part of a retaliatory trade strategy.
Following this declaration, L'Oréal assembled 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 specifying potential tariff targets, which were initially scheduled to commence on April 1. However, the European Commission postponed enforcement until April 13 to facilitate further diplomatic discussions with the United States.
The French spirits sector, also facing the threat of US tariffs of up to two hundred percent, similarly sought the delay.
France’s cosmetics industry association argued against new tariffs, pointing out trade statistics that show France imports about five hundred million euros worth of American cosmetics annually while exporting around two and a half billion euros in personal care products to the US. The wider European cosmetics industry supports approximately two million jobs across the continent.
Although L'Oréal produces roughly two-thirds of the products it sells in the US domestically, company sources suggest that its fragrance and scented product divisions remain particularly susceptible to tariffs.
A downturn in these areas could affect the company's financial performance, which is already strained by declining consumer confidence in China.
China is a crucial market for the global cosmetics sector.
With a burgeoning middle class, it has become the second-largest beauty market in the world after 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 a total decrease of around four percent for the entire year.
China represents about seventeen percent of the company's overall sales.
In contrast, sales in the US increased by only one point four percent in 2024.
Over the last year, L'Oréal's stock price has fallen by approximately nineteen percent following several years of growth during the COVID-19 pandemic, fueled in part by a surge in demand for high-end cosmetics.
Despite the recent decline, the stock has appreciated by forty-eight percent over the past five years.
In 2024, L'Oréal reported annual revenues of forty-three point four eight billion euros, marking a year-over-year increase of five point six percent.
Net profit reached six point four one billion euros.
For comparison, its American competitor, Estée Lauder, currently has a market valuation of about twenty-four billion US dollars.
The New York-listed company has experienced a share price drop of roughly fifty-seven percent over the past five years, including a fifty-two percent decrease in the last year alone.
L'Oréal’s strong performance has made it a significant asset for multiple high-profile investment funds.
One of its notable supporters is Terry Smith, a prominent UK-based investor whose fund oversees thirty-six billion pounds in assets.
The cosmetics industry’s request for exemption, much like that of the spirits industry, has encountered public backlash.
Critics argue that excluding luxury items from the EU's trade response indicates a disconnected viewpoint, particularly given the ongoing economic strains initiated by the previous US administration.
