When President Trump abruptly introduced 25 % tariffs on Canada and Mexico on Feb. 1, a WhatsApp group for Canadian magnificence startup founders sprung into motion.
Inside two days, that they had fashioned the Store Canadian Indie Magnificence Collective, a web site itemizing home choices from sustainable body-care model Everist, clear skincare label Graydon and Ayurvedic skincare assortment Sahajan. The 20 model founder members itemizing their labels on the location contributed funds to arrange the collective’s web site and employed a publicist to put it up for sale inside Canada.
“It occurred with lightning velocity,” stated Lisa Mattan, the founder and CEO of Sahajan and a member of the collective. “It speaks to that Canadian hustle.”
Trump’s acknowledged motive for the tariffs is an “extraordinary risk posed by unlawful aliens and medicines,” however founders, retailers and traders are involved in regards to the potential of the tariffs to pressure them to decide on between denting margins or elevating costs when shoppers are already involved about inflation. Earlier than the tariffs took maintain on Tuesday, the nation’s homegrown magnificence manufacturers, who’re closely depending on US exports, have been scrambling to ship merchandise to US warehouses. Grappling with the long-term implications of Canada’s function as an export-led startup hub, they’ve additionally joined influencers and retailers getting on board with “Purchase Canadian” social posts and adverts.
“The response of Canadians has been so aggressive,” stated Jenn Harper, the founder and CEO of Canada-based Cheekbone Magnificence, which has been posting Instagram content material highlighting the actual fact that it’s the solely Canadian color cosmetics model at Sephora Canada, and resharing influencers’ Canadian magnificence model roundups. Sephora Canada itself has seen its Instagram feedback fill with shoppers asking for a curated record of Canadian manufacturers to buy.
“I’ve by no means seen something prefer it,” Harper added.
A World Magnificence Capital
The launch base for world powerhouse manufacturers like MAC Cosmetics, Deciem, and Ilia Magnificence, Canada has lengthy been a thriving world magnificence startup capital. For brand new magnificence manufacturers, export to the US has been a given, and is usually baked into their enterprise fashions from the start.
“We’re already worldwide on day one. We’ve got to manage digital spend in two geographies out of the gates,” stated Manica Blain, the founding father of VC agency Prime Knot Ventures, which invests in client DTC manufacturers together with Sahajan and Everist. This two-market mindset makes Canadian founders “extremely scrappy,” Blain stated.
The majority of Sahajan’s gross sales, for one instance, are break up practically 50-50 between Canada and the US, with solely 2 % coming from outdoors these two international locations.
“It’s extremely essential to go to the US shortly,” stated Mattam. Past the scale of the market, the US is essential for recognition by US-based press and influencers. That worldwide positioning — additionally seen in world magnificence startup capitals like Seoul — is what helps make Canada a “hub for innovation,” stated Mattam.
Smaller indie manufacturers with Canada-exclusive manufacturing won’t be able to shift operations as shortly as main world conglomerates, say founders and traders. The extent of the influence continues to be to be decided, as questions like whether or not a de minimis exemption permitting tax-free orders as much as $800 — which was briefly suspended, then reinstated for China (with a be aware that it’ll nonetheless ultimately go into impact) — would apply to Canadian items, or if tariffs can be utilized to the wholesale or retail price of products, which has vital implications for margins.
The influence wouldn’t be restricted to Canadian manufacturers promoting within the US, as doable retaliatory tariffs mixed with client boycotts may dent US manufacturers’ efficiency in Canada. That market has been a giant alternative for enlargement in recent times — Canada reportedly contributed $2 billion out of Sephora’s $10 billion in North America income in 2023, in line with trade sources. Sephora didn’t present a affirmation.
Magnificence Patriotism
In response to the tariffs, the wonder trade has been tapping into “Purchase Canadian” delight.
Sahajan, for instance, has created a number of adverts and social posts highlighting that it’s a Canadian model. One advert options the Canadian flag alongside founder Mattam stating, “It has by no means been extra essential to buy Canadian.” The cosmetics model Nudestix, in the meantime, has been posting lists of Canadian magnificence, style and residential manufacturers on its Instagram account and inspiring its viewers to buy them.
“There’s an fascinating alternative for Canadian manufacturers to place up their hand, perhaps louder than they ever had earlier than, and say, ‘we’re Canadian,’” stated Mattam.
Retailers have additionally gotten on board. The Detox Market’s Canadian homepage opens to a “Canadian clear magnificence” banner linking to a curation of manufacturers together with physique care model Sidia, clear skincare label Three Ships and extra.
However founders additionally wish to make sure the US buyer just isn’t alienated. To maintain costs regular, they’ve scrambled to maneuver their merchandise into US-based third-party warehouses earlier than the tariffs take impact. “The very last thing that you just wish to do is be hitting your buyer with that vast value improve,” stated Blain. Sahajan, for instance, moved an estimated three months price of product to the US in anticipation of tariffs.
These are short-term options, whereas the long run stays unclear. Canadian founders solid doubt on the concept tariffs will spur a US-led manufacturing growth — a pipe dream in the case of magnificence.
“You’d be reverse-engineering a product and beginning over.” stated Sasha Plavsic, the founding father of Ilia Magnificence, which has some manufacturing in Canada together with a number of world areas together with the US and Europe. The 2-year common for product growth, she identified, “is a really lengthy course of, and by that point, the commerce warfare could possibly be over.”
Even when these tensions cool within the coming months, the dialog has already shifted founders’ and traders’ mindsets in Canada in the case of the place to search for development. Relatively than focusing squarely on the US at launch, founders say they’re more likely to begin taking a look at enlargement to different markets extra shortly any more.
If tariffs stay at 25 %, Canada’s startup scene is in for a tough 12 months.
“It will kill small companies, completely, 100%,” stated Harper of Cheekbone Magnificence. “That is doing nothing for the economic system. It’s simply creating extra inflation and making all of our items, irrespective of who we’re — in Canada or the US — simply price extra.”
