The French cosmetics industry has braced for three potential outcomes as a trade war between the US and the EU looms.
The scenarios range from manageable to challenging and disastrous.
With the threat of higher US tariffs hanging over it, the French cosmetics sector, the world’s largest exporter in the field, has been preparing for the worst.
Emmanuel Guichard, general delegate of France’s Federation Union of the Beauty Industry (FEBEA) said the French beauty industry was closely monitoring US announcements. Industry “trembles every time Donald Trump posts on X”, he said on February 7.
According to the FEBEA, the US remains the world’s leading buyer of French cosmetics, with exports worth €2.8 billion, or 12.6 per cent of total exports.
For the cosmetics and luxury industries, adapting to sudden and drastic change is particularly challenging.
A recognised French flagship, cosmetics could be a prime target in trade disputes.
China imposed temporary anti-dumping measures on brandy imports from the European Union on Tuesday, hitting brands from Hennessy to Remy Martin. https://t.co/9rsQZFVnJ3
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Speaking to Brussels Signal, on February 12, Sylvain Bersinger, chief economist at French economic consultant company Antarès, said US President Donald Trump’s unpredictability made it difficult for French companies to anticipate and prepare for potential shifts in US trade policy.
A study published on February 6 and commissioned by Cosmetic Valley, a major French industry group, laid out three possible scenarios.
In the first scenario, the study examined the potential impact of Trump’s proposed broad trade tariffs. While they were not expected to drastically affect the overall trade balance between the US and France, due to exchange rate shifts, they would likely lead to a drop in French exports to the US.
If US tariffs were to increase by 10 per cent, as speculated, it was expected that the price competitiveness of French cosmetics would diminish slightly in the US market.
Still, given the low “price elasticity” in cosmetics — where consumers do not drastically cut back on purchases due to price hikes — the overall impact on French cosmetics exports should remain limited, it said.
The second scenario studies the impact if the US tariffs were specifically aimed at French cosmetics — a possibility that has yet to be raised by Trump.
For the cosmetics industry alone, the impact would be far more severe. The minor exchange rate effect would not compensate for the negative influence of the tariffs, meaning French cosmetic exports would be hit hard, particularly due to a loss in price competitiveness, the study predicted.
On the other hand, if all imported cosmetics were subject to tariffs, the blow would be softened as US consumers would likely switch to domestic products rather than avoiding French brands alone, it said.
The study also considered the possibility of European retaliation, arguing that would likely have a limited impact on the French cosmetics sector.
Given that France exports much more cosmetics to the US (€2.7 billion-worth annually) than it imports (€488 million), retaliatory tariffs from the EU would not have the same leverage.
Instead, Europe would more likely target symbolic American products, such as cultural goods (films, music), or high-volume imports, the study claimed.
But Europe’s options for effective retaliation were limited because its major imports from the US included hydrocarbons, aerospace components (as used by Airbus) and pharmaceuticals, which represent critical sectors for the European Union that would make retaliation challenging.
In such a case, the study argued that the French cosmetics industry would face significant losses and recovery would be much harder.
The third scenario studies the impact of a complete trade war with the United States. In this case, the French cosmetic industry would be in “turmoil”.
“If the situation degenerated into a full-scale war, the threat to the French cosmetic industry would be heavy,” they said.
In the case of complete trade war, Donald Trump could shift trade flows, thereby impeding French cosmetic business.
“The risk would be that many countries in the world, following the precedent of an increase in US customs duties, would increase customs duties (or take various protectionist measures), feeling legitimised in doing so by the precedent set in the United States,” the report’s authors wrote.
This sudden shift in business could pose “a real risk” for French cosmetics manufacturers, who export over 60 per of their production.
In conclusion, it said, any targeting by the US of French cosmetics with tariffs could severely damage the sector. European retaliatory measures would likely have limited benefits and a full trade war would be catastrophic for the French cosmetic industry.
Speaking to French media on February 7, Guichard said French companies have invested in the US and its companies had also invested in France, meaning no one on either side of the Atlantic was interested in new customs duties.
