US trade wars: Canada imposes retaliatory tariffs as cosmetics firms face upheaval

Canada has applied 25% tariffs to a list of goods worth CA$30 billion (US$20.8 billion), including cosmetics, “in response to unjustified US tariffs.” The move coincides with the appointment of Canada’s new prime minister, Mark Carney, who has vowed to win the trade war with the US and spent a significant portion of his acceptance speech addressing the issue.

The back-and-forth tariffs leave Canadian and US cosmetics companies confused about how to proceed with their business operations. 

Elizabeth Lista, co-founder of Miracle 10, a Canadian skin care brand, told Bloomberg she is unsure how the company will source raw materials for its products. Lista calls the tariff war a “wait-and-see situation.”

The US imposed a 25% tariff on Canadian goods last Tuesday but, days later, rescinded the inclusion of some goods compliant with an existing trade agreement. Today, Donald Trump has announced a doubling of tariffs on steel and aluminum imports from Canada, signaling that the trade war will continue to escalate. 

Canada is the top customer for US goods and services exports. The country buys more US goods than China, Japan, France, and the UK combined. Over US$2.5 billion worth of goods and services cross the US-Canadian border daily.

The Canadian government says it is prepared to continue fighting back against Trump’s tariffs: “All options remain on the table… The US administration’s decision to impose tariffs on Canada will have devastating consequences for the American economy and people.”

Cosmetic comapnies watch as the US and Candian trade war unfolds.If US tariffs are maintained, Canadian counter-tariffs could increase to CA$155 billion (US$107.64 billion). The scope could also be increased if new tariffs are imposed.

“The US has chosen to pursue a harmful course of action that threatens the prosperity of both our nations. Canada stands firm in defending our economy, workers, and businesses against these unjustified tariffs,” says Mélanie Joly, Canada’s minister of foreign affairs.

Small beauty battles

The co-founder and COO of Miracle 10 Skin Care says that as a small business, the brand lacks the resources to navigate, proceed, and plan for the new tariffs.

Lista asserts that the Canadian government is more focused on big business. She wonders where the costs will be passed down, highlighting that Canadian consumers may face higher product prices

Miracle 10 primarily conducts its business in Canada, with some consumers in the US. The brand is “trying to figure out what to do for those customers.” 

The tariffs on US cosmetics to Canada create ambiguity about how industry members will obtain some necessary raw materials — such as vitamins and active ingredients — for formulations. Lista says that there are no Canadian manufacturers of some essential raw materials.

The small beauty business owner adds that Miracle 10 “might be able to” source the raw materials “elsewhere.” Raw materials are not on the list of materials under tariff, but complete cosmetics products are. 

Lista urges Canadian beauty buyers to look for a local replacement to the US-made products in their skin care routines: “There are fantastic alternatives to the American products you might already be buying… we have excellent products made locally here in Canada. You are doing your part, helping to fight the trade war.”

Carney comes out fighting

Mark Carney won the position of Canada’s prime minister, succeeding Justin Trudeau, on Sunday. The Liberal Party leader beat three rivals in the same party, taking 85.9% of the vote.Canada-based brands are telling Canadians to shop locally.

“Americans should make no mistake, in trade, as in hockey, Canada will win,” Carney said during his victory speech. He vowed to keep tariffs on US imports until the US showed Canada “respect.”

“I know these are dark days. Dark days brought on by a country we can no longer trust. Canada will not stand by as the US imposes unwarranted and unreasonable tariffs on Canadian goods.”

Of the US’s top five trading partners, Canada is the only country that the US has a trade surplus in manufacturing. 

The Trump administration has cited illegal immigration and fentanyl coming into the US from Canada as the main reasons for the tariffs.

“President Trump promised that tariffs on Canada would remain in effect until drugs and illegal aliens stop invading our country,” says the US government.

However, according to the Canadian government, less than 1% of fentanyl and illegal crossings into the US come from Canada.

“Canada is being needlessly and unfairly targeted by these tariffs — and the US’s decision leaves us with no choice but to respond to protect Canadian interests, workers and businesses. Working with provincial, territorial, and industry partners, our singular focus is to get these tariffs removed as quickly as possible,” says Dominic LeBlanc, Canada’s minister of finance and intergovernmental affairs.

Working around restrictions

The trade war is not the only treacherous ground the Canadian personal care industry has to navigate. The country recently updated its Cosmetic Notification Form to include an entry for the Canadian-based representative.

Since March 5, the federal institution has required brand owners to have a representative based in Canada if they want to sell cosmetics on the Canadian market. This requirement has existed since October 2024 but is now actively enforced through a regulatory update.

Additionally, last month, the country updated its Cosmetic Ingredient Hotlist, adding new restrictions to retinal and prohibiting thioglycolic acid esters.