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2025 Tariff War, Prices Rising, Products Disappearing?
“Trump Tariff Shockwaves Spark a Survival Game in the Hair Industry”

The U.S.–China tariff war, which began in February 2025, escalated rapidly, with both countries imposing ultra-high tariffs—up to 145% by the United States and 125% by China. However, on May 12, the Trump administration announced a reduction in tariffs on Chinese goods from 145% to 30%, while the Chinese government lowered tariffs on U.S. goods from 125% to 10%, offering some relief to the strained trade relationship. These changes will take effect after a 90-day tariff pause, providing the market with breathing room and an opportunity to rebalance. Tensions, however, remain unresolved, particularly as high tariffs on imports from China and Southeast Asia—key suppliers for the beauty supply industry—persist. With the outlook still uncertain, companies are urged to make strategic decisions amid ongoing volatility. It is essential to develop a mid- to long-term response strategy, including diversifying supply chains, adjusting inventory levels, and reassessing import logistics.

*This article reflects trade policies as of May 12^th, 2025. Both the scope and timing of the tariffs are subject to change, and market conditions may continue to evolve.

Universal tariffs and Reciprocal tariffs – Simple and Short

What are customs duties, and who pays them?
A customs duty (or import duty) is a tax imposed on goods entering a country from abroad. This tax is paid by the importer—the business bringing the goods into the country.

What is a universal tariff?
A universal tariff is a standardized rate applied to all imports, regardless of their country of origin. It treats all exporting countries equally by imposing the same tariff rate across the board.

What are reciprocal tariffs?
Reciprocal tariffs are based on the principle of “If they tax our products, we tax theirs.” Under this trade policy, a country imposes the same tariff rate on goods from another country as that country imposes on its own exports.

The Trump administration’s “Liberation Day”

On April 2, 2025, President Trump announced a new tariff policy. The key elements are as follows:

1. Introducing universal tariffs: A flat 10% tariff on all imports.
2. Applying additional reciprocal tariffs: Extra tariffs applied to approximately 60 countries.
3. Reciprocal global production formula:

The U.S. Trade Representative (USTR) stated that reciprocal tariff rates are calculated using the following formula:

Reciprocal tariff rate = (Trade deficit ÷ Imports) × 0.5

This means that the larger the trade deficit with a specific country, the higher the reciprocal tariff rate.

China: The U.S. beauty industry relies heavily on imports from China, including packaging materials, raw ingredients, and beauty-related miscellaneous goods.

• Previous Situation: In February and March, the U.S. imposed an additional 20% in “tariffs imposed in response to fentanyl precursors” on Chinese goods. On April 7, the U.S. warned that China might retaliate with a 50% tariff on top of the existing 34% rate. On April 9, the U.S. followed through by raising tariffs to 84%, bringing the total to 104%. In response to China’s retaliatory measures, the U.S. further escalated tariffs the same day, reaching up to 145%.
• Adjustments:

• The S. has withdrawn 91% of the previously imposed 125% in additional tariffs and suspended 24% for 90 days. However, the 20% fentanyl-related tariffs remain in effect, resulting in a current total of 30%.
• China likewise lowered its retaliatory tariffs from the previous 125% to 10%.

• The combined tariff reductions amount to 115 percentage points and are now considered formally balanced.
• Outlook:

The adjusted tariff rates will remain in effect for the next 90 days and may be revised based on the outcome of ongoing negotiations. If negotiations fail,

• the S. is expected to reimpose the suspended 24%, bringing the total tariff back to 54%
• China, in turn, may raise its tariffs again to 34%.

[Summary of tariff rate changes for major beauty supply exporting countries — as of May 2025]

Shades of tariffs: A test for beauty supply stores

With a large share of beauty supply products—such as wigs, hairpieces, beauty accessories, and tools—imported from China and other Asian countries, rising product costs are becoming unavoidable. While raising prices may appear to be the only short-term solution, slow consumer response can leave beauty supply stores facing a double burden: shrinking profit margins and an increased risk of stagnation.

The real concern is that this may not be just a temporary disruption. Experts point out that trade conflicts rarely resolve quickly, and it often takes a long time for conditions to return to normal. In the end, the bigger risk may not be the tariffs themselves, but the lasting structural changes they cause in the supply chain. Once the current tariff pause ends, the resulting cost increases will inevitably be reflected in product prices—and at that point, a store’s ability to adapt could determine whether it thrives or falls behind. Now is the time for operational readiness. What matters most is how much inventory has been secured in advance, how adaptable your pricing strategy is, and how well you can maintain customer trust. As one retailer put it: “This isn’t a time for price wars—it’s a time to prove the strength of your operations.”

The State of the Beauty Industry as of May 1, 2025

1. Wholesalers and manufacturers in chaos: halts, negotiations, and production shifts

Company A, a wholesaler with production bases in China and Myanmar said, “We had planned to move some of our production from China to Myanmar, but shortly after the Chinese tariffs were announced, Myanmar was also subject to the 44% high tariffs, making the unit cost of production almost the same as in China, so we put our plans on hold and are waiting to see how the market develops,”

More recently, Chinese customs have been imposing tariffs of up to 125% on sample products from the U.S. based on their own calculations of cost, leading some Chinese factories to send samples back or destroy them. Meanwhile, Company B, a small importer of chemical products, is considering price adjustments for small imports using air transportation but believes that large imports in containers are virtually impossible due to the high level of customs scrutiny due to the accumulation of customs clearance history data. Amid the tariff war, some companies are finding new opportunities. Braided hair manufacturers with production bases in the Middle East and Africa, in particular, are gaining attention due to their relatively low tariff exposure.

“New opportunities for companies with production bases in the Middle East or Africa”

“Now is the time for companies with production bases in Africa. As production lines in China and Southeast Asia face bottlenecks, companies with manufacturing bases in the Middle East and Africa may stand to benefit from the tariff chaos. However, underdeveloped infrastructure and tariffs on imported raw materials remain key challenges.”

— Hair brand sales representative

2. How retailers are responding: inventory strategies, price adjustments, and temporary closures

Owner C, who runs a retail store in the southern region, secured a large inventory of best-selling products ahead of the tariff announcement. ‘Before backorders and inventory shortages began in June, I raised prices in advance to help offset potential losses from supply disruptions,’ he said.

“Should we shut down the store and reopen later? I gave it serious though.”

“If we face shortages like we did during the pandemic, the inventory we have now could be worth its weight in gold. I seriously considered pausing operations and reopening once the market recovers.”

— Southern retail store owner C

Store Owner C recalled how 4×4 closures, which typically sold for $10 to $15, surged to $120 during the pandemic due to supply shortages. “Back then, it was a logistics issue — but now, the problem lies in production itself,” he said. Some companies are already limiting order quantities or selectively ordering only a few items, signaling that they may be bracing for future shortages.

“Turbulent markets, opportunity favors the prepared”

“While some owners are selling their stores due to current challenges, many may not realize the potential future value of their inventory. Exercising patience during volatile market conditions could provide a competitive advantage, and it may be premature to liquidate assets at this stage.”

— Beauty supply retail store owner, East Coast A

Graph of projected inventory and price impact of tariffs

3. The turnover paradox: even big hair companies are at risk

“Hardest hit: Large companies with high turnover”

In the hair industry, it typically takes about a year for a product to reach the end customer. It takes three months to prepare, three months to produce, three months to load in containers and ship them, and another three months to store in warehouses and sell in stores. Major companies that focus on best-selling items usually don’t hold large inventories; their products sell as quickly as they arrive. If the tariff hike disrupts this flow, the first to be affected will be these high-turnover companies. Once their inventory starts to run low, the ripple effect will spread much faster than expected.”

— Hair industry insider

There’s growing concern within the industry that large, high-turnover companies may be the first to face supply disruptions. These companies, which focus on best-selling products, typically maintain low inventory levels. In fact, signs of depletion are already emerging in some product lines.