By Natalie Obermann, Vice President, Global Strategies
The Office of the United States Trade Representative’s (USTR) announcement that the United States and Mexico concluded the first bilateral round related to the Joint Review of the United States-Mexico-Canada Agreement (USMCA) is an encouraging step forward for the cosmetics and personal care products industry. We appreciate the inclusion of our sector in these discussions.
As the July 2026 USMCA review approaches, there is a valuable opportunity to build on the positive engagement with Mexico and ensure that Canada remains included in a strong trilateral agreement that supports the success of the U.S. cosmetics and personal care products industry, while preserving the groundbreaking USMCA Cosmetics Annex.
Economic Impact
The cosmetics and personal care products industry is a powerful yet often overlooked driver of the U.S. economy. In 2024 alone, the industry generated nearly $500 billion in economic output, supported more than 2.6 million jobs, contributed over $240 billion to U.S. GDP, and generated more than $130 billion in tax revenue. More than 95 percent of companies in the sector are small businesses. The industry invests over $1.3 billion annually in research and development, and more than 13 percent of its workforce serves in STEM-related roles.
Our industry is a high-value, innovation-driven American manufacturing industry deeply integrated across North America.
At the same time, Canada and Mexico account for more than one-third of U.S. global cosmetics exports. Canada alone purchases approximately $4.4 billion in U.S. personal care products annually, making it the largest export market for the industry. These are not abstract trade figures. They represent American manufacturing jobs, research investments, logistics networks, packaging operations, ingredient suppliers, and thousands of small and medium-sized businesses that rely on predictable regional trade rules. This is why maintaining tariff-free trade under a trilateral USMCA is essential.
Maintaining the Trilateral Agreement
The consequences of allowing the agreement to weaken or of reverting to tariffs among North American partners would be immediate and measurable. If 25 percent tariffs return on personal care products traded between the United States, Mexico, and Canada, U.S. personal care exports could decline by nearly 12 percent, costing approximately $1.9 billion in exports alone. Industry economic output would fall by roughly $1 billion, while employment and investment would decline alongside reduced competitiveness.
Equally important is preserving the USMCA Cosmetics Annex, the only cosmetics-specific annex included in any U.S. trade agreement. The annex has been instrumental in reducing duplicative regulatory requirements, improving transparency, streamlining compliance obligations, and removing costly barriers that previously complicated trade throughout North America. Some of these important regulatory provisions are uniquely valuable in the U.S.-Canada relationship, helping companies avoid unnecessary costs while ensuring high standards of product safety and consumer confidence.
The annex represents exactly the kind of smart, modern trade policy that strengthens competitiveness without compromising safety or regulatory integrity.
The Administration deserves credit for beginning these important conversations with Mexico and for recognizing the importance of the cosmetics and personal care products sector in those discussions. As the review process continues, USTR should ensure negotiations with both partners preserve the core framework that has allowed North American manufacturing and innovation to thrive.
For the cosmetics and personal care products industry, a strong trilateral USMCA is not simply preferable; it is essential.
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