Cosmetics are a U.S. manufacturing success story. Tariffs pose a threat.

Only a few months ago, Interparfums co-founder Jean Madar didn’t give two thoughts about tariffs, much less how they could upend his $1.4 billion perfume business.

Now, he and his team are having daily “war room” meetings about levies as the company pushes to reconfigure its supply chain to reduce its exposure to what the chief executive calls the “total roller coaster” of U.S. trade policy.

“So we all have a wake-up call,” said Madar, whose Paris- and New York-based company makes about 40% of its products in the United States.

President Donald Trump’s tariff-heavy trade policy has rattled companies that sell foreign products, especially those made in China. But it has also sparked a scramble among those that manufacture in the U.S. and now have to contend with higher prices on imported inputs.

The beauty and personal-care industry has stood out as a rare example of a retail sector that has traditionally contributed a trade surplus to the U.S. economy — a scenario Trump says he hopes to replicate in his war against the nation’s long-standing trade deficit.

But by imposing steep tariffs that interrupt beauty products’ supply chains, the administration could hobble an industry that has given Americans a competitive advantage on the global stage for three decades, according to industry groups and analysts.

The cosmetics industry “could be very negatively impacted by tariffs if some of the things that they import are subject to higher costs,” said Neil Saunders, a retail analyst at GlobalData. “And of course, that ultimately could damage the businesses that are actually making things here in the U.S., which is what tariffs are not supposed to do — they’re supposed to do the opposite of that.”

“It’s a very naive policy,” he added. “It doesn’t understand the way the world actually works.”

Interparfums, whose shares are traded on the Nasdaq, produces fragrances for such brands as Coach, Guess, and Abercrombie & Fitch. A significant portion of what it produces in the United States is exported and subject to levies in destination countries. At the same time, the company relies on components from China, particularly plastic caps and certain metal ornaments for bottles. Now that tariffs on Chinese goods are at 145%, Interparfums is looking to other countries for the components — but that will take time, Madar said.

One thing’s for sure, he said: Such components are very difficult to find in the United States.

“We had a second look to see if we can source this component domestically,” Madar said. “And honestly, maybe Trump doesn’t know, but these industries do not exist.”

The company announced in April that it would raise prices on certain products in the United States by 6% to 7%, a move it considered a last resort. On other products, Madar said, the company would take a lower profit margin. But Madar said his company is responding in a deeper way: reconfiguring its supply chain to manufacture products closer to their consumer bases, which he said could take as long as nine months.

That means reformulating all its fragrances and testing equipment as well as the product’s stability.

“There is a lot of work, and it’s expensive, too,” he said. “You have to spend this money now in order to eliminate this issue going forward.”

Other beauty retailers are facing similar challenges, said Mark Cohen, a retail analyst and former director of retail studies at Columbia Business School. Large brands like Estée Lauder and L’Oréal rely on complex global supply chains in which components are sourced from numerous countries that might be assembled in one place and then distributed and sold in others.

He also emphasized that beauty is a business driven by large, recognizable brands — many from the United States and Europe — with loyal customer bases. The tariffs may prompt Canadians to stop buying American brands, for example, or the Chinese government to ban certain American brands.

“At the end of the day, when you create a trade war, there are never going to be winners vs. losers in a world that’s got alternative choice,” he said.

For more than three decades, the personal-care products industry — which produces everything from dental floss to high-end makeup — has been a net positive for U.S. manufacturing, generating a trade surplus, according to the Personal Care Products Council, an industry group. That surplus reached $2.6 billion in 2022, according to the group, though results have been weaker since then.

“We are concerned about trade policies that could result in higher prices for personal care products and impact our industry’s growth and global competitiveness,” Francine Lamoriello, the group’s executive vice president, said in a statement last month. By her reckoning, the cosmetics and personal-care products industry contributes some $68 billion in manufacturing revenue and 4.6 million jobs to the U.S. economy.

That outlook is already showing up in company forecasts. Procter & Gamble, the maker of Gillette razors and Crest toothpaste, cut its earnings forecast in April and said consumers may see higher prices because of tariff uncertainty.

Some U.S. beauty companies are particularly vulnerable to whatever trade countermeasures Beijing might implement. Chinese consumers accounted for 26% of Estée Lauder’s net sales in 2024, according to its latest annual report — about on par with its sales in the United States. E.L.F. Cosmetics, which makes inexpensive “dupes” of luxury brands, manufactures virtually all of its products in China, according to the company’s filings. E.L.F. declined to comment.

Estée Lauder CEO Stéphane de La Faverie told analysts recently that the company’s regionalized supply chain would “partially cushion the direct impact of tariffs on profitability.”

“We already increased North America production of U.S. demand from its already high level,” he said.

Smaller businesses striving to become the new faces of the American cosmetics industry face similar dilemmas.

“We’re all trying to make educated gambles,” said Charlotte Palermino, co-founder of the start-up skin care company Dieux Skin. “That’s the best way that I can put it because there are no educated decisions when there is no plan. There is no strategy. There is erratic-ness.”

Dieux has only 18 employees, up from six just three years ago, and serves a mostly American consumer base. But its products’ components are sourced from all over the world — including France, Mexico, and China — and are ultimately manufactured at factories in New York and New Jersey. The $45 tubes of “Instant Angel” face moisturizer and $25 “Forever” eye masks — two of the company’s most popular items — are sold at some 550 Sephora locations across the country.

Growth has been steep since the company was founded five years ago, but Palermino sees it as hard to maintain that trajectory. The on-and-off tariff policies are “actually stifling growth because no one wants to take a big swing in a time of uncertainty — and nobody’s going to be investing in expanding the team,” she said.

Dieux’s plan is more about hunkering down. That includes not raising prices and eating “a loss in margin,” Palermino said, while acknowledging she may have to raise prices eventually. That is a decision she said she wouldn’t take lightly because it could not only stifle demand, but also present new costs: signage and labeling with new prices, for instance.

Palermino and her partners are also weighing whether to stockpile components before they become too expensive. But that poses a large up-front investment, and holding that much inventory poses the risk of it spoiling or getting damaged. Plus, Palermino asked: What if “we go into a depression? Then are people going to be buying $45 moisturizer?”

Madar, the Interparfums executive, said all of the reconfiguring of its supply chain in the United States and elsewhere will help mitigate risks but will probably not provide any net gains.

“At the end, it’s a wash,” Madar said. “So all this headache — for what?”