Estée Lauder to cut thousands of jobs, warning of tariff impact

Estée Lauder Companies, which owns cosmetic brands such as Clinique, MAC, and Jo Malone, has announced that it will double its planned layoffs. The company stated that the uncertainty brought about by U.S. President Trump's tariff policies is a significant reason for this decision.

The American multinational corporation had already been undergoing business restructuring to address declining performance. Now, the company anticipates that the number of layoffs could reach 7,000. Amid escalating global trade tensions, the import tariff policies implemented by the Trump administration undoubtedly pose a greater challenge to the operating prospects of multinational corporations.

Nevertheless, the tariffs originally planned for Canada and Mexico were suspended at the last minute. Estée Lauder Companies, which also owns brands such as Bobbi Brown, Aveda, and Tom Ford, stated that it needs to save approximately $1 billion (approximately £805 million) in costs to cope with "the risk of economic recession... including the impact of tariffs and sanctions."

"We are making significant changes to our operating model to make it more streamlined, agile, and efficient," said CEO Stéphane de La Faverie. The company also pointed out that rising inflation has also driven up operating costs. Estée Lauder sources raw materials from several countries, including Australia, Madagascar, and Indonesia, and has operations or research and development facilities in countries including the UK, Canada, Switzerland, and China. With its products sold in more than 150 countries worldwide, the escalation of the Trump administration's tariff policies and the potential retaliatory measures could lead to additional taxes on goods crossing borders.

Estée Lauder employs approximately 62,000 people worldwide, and the final number of layoffs will be between 5,800 and 7,000, with some employees being reassigned to new positions. The company did not disclose the specific locations of the layoffs. It is reported that the company has approximately 4,400 employees in the UK and Ireland. While announcing cost-cutting measures, the cosmetics giant also stated that it lost $590 million (approximately £474 million) in the three months to December due to decreased consumer spending in China and South Korea.

Estée Lauder is not the only company to warn about the potential impact of a tariff war. Beverage giant Diageo, which owns brands such as Guinness, Johnnie Walker, Baileys, and Smirnoff, also warned on Tuesday that if plans to impose tariffs on Mexico and Canada were implemented, it would "likely" have an impact on its business. Diageo CEO Debra Crew stated that the company is taking "a range of steps to mitigate the potential impact and disruption of tariffs on its business." Other industries, from automakers to avocado growers, are also expected to be significantly affected.

Some other consumer brands are being more directly affected by tariffs. China has placed PVH, the American company that owns designer brands Calvin Klein and Tommy Hilfiger, on an "unreliable entity list," citing the company's "discriminatory measures against Chinese enterprises." This will make it more difficult for these brands to do business in China. They may face sanctions, including fines, and their foreign employees may have their work visas revoked.