Top Exporter to the U.S. Last Year, K-Beauty Surpasses France
25% U.S. Reciprocal Tariff Imposed... Concerns Over Competitiveness
Ministry of SMEs and Startups Launches Advisory Group and Comprehensive Marketing Support
Minister Oh Youngju: "A Crisis and an Opportunity... Full-Scale Response"
There is growing concern over the future of "K-beauty," which has dominated the U.S. cosmetics market. Amid tariff pressures from the Trump administration, there are fears that Korea's status as the top exporter of cosmetics to the United States could be shaken. The Korean government has announced tailored measures, including a tariff response advisory group and global marketing support, to minimize the impact on domestic small and medium-sized enterprises (SMEs). This is because if cosmetics, the leading export item for SMEs, are hit, it could affect overall exports as well.
On May 2, the Ministry of SMEs and Startups held a meeting with cosmetics-exporting SMEs at "Olive Young N," CJ Olive Young's innovation store in Seongdong-gu, Seoul, and announced the "K-Beauty SME and Venture Company Global Sustainability Plan." Companies attending the event requested specialized support to respond to export regulations.
Top Export Item for SMEs... Price Competitiveness at Risk with Reciprocal Tariffs
Cosmetics are the number one export item for Korean SMEs. Last year, exports reached a record high of $6.8 billion. In the first quarter of this year, exports set a new record at $1.84 billion, up about 20% from the same period last year. Including large corporations, exports of K-beauty products to the U.S. reached $1.701 billion last year, surpassing France ($1.263 billion) to become the top exporter to the United States.
However, the situation changed last month when the U.S. government imposed a basic tariff of 10% on cosmetics. A 25% reciprocal tariff on Korean products is also set to take effect after a 90-day grace period, making a decline in price competitiveness inevitable. This rate is higher than that imposed on France and Italy (20% each), which could significantly impact domestic companies that have focused on the mid- to low-priced market. The industry is concerned that, with dependence on U.S. exports already heightened due to a slowdown in the Chinese market, these tariff measures could hinder SME exports.
Establishing Advisory Groups and AI Consultation... Tailored Responses Launched
In response, the Ministry of SMEs and Startups is fully activating a dedicated tariff response system. A "Cosmetics Tariff Response Advisory Group" composed of customs brokers and association experts will be established within the Korea Testing & Research Institute (KTR), and real-time consultations on tariff matters such as certificates of origin will be provided via a KakaoTalk artificial intelligence (AI) chatbot. The Korea Customs Service will also simplify the certificate of origin process by allowing domestic manufacturing certificates to be used.
Local marketing support will also be strengthened. A new "K-Beauty Online Marketing Program" will connect U.S.-based influencers with domestic SMEs, and in the second half of the year, a "K-Beauty Luxury Delegation" will be formed to participate in the "Las Vegas Cosmoprof Exhibition" and facilitate buyer matching.
Most customers shopping for cosmetics at a cosmetics mall in Myeongdong, Seoul, are foreigners. Photo by Huh Younghan
Support for entering new markets will be provided in parallel. The "Cosmobeauty Seoul" exhibition, to be held from May 28, will be co-hosted by the government and the private sector, and a "Big Buyer Consultation Meeting" will invite major distributors from the U.S., Japan, and other countries. Support for professional seller consignment sales will be expanded for companies lacking the capability to enter online platforms and conduct marketing in regions such as Europe and South America. To ease the burden of export regulations, the overseas certification support limit for K-beauty companies will be temporarily raised from 35 million won to 50 million won, and the fast-track overseas certification process, currently applied only to U.S. FDA and European CPNP, will be extended to the UK, India, and Germany. The "K-Beauty Creator Challenge," a public-private initiative to discover and nurture promising brands, will be expanded to Southeast Asia and Japan. The "Global K-Beauty Fund," launched last month, will complete its formation within the year to encourage full-scale investment.
From next year, a dedicated fund will also be established to promote mergers and acquisitions (M&A). A "K-Beauty Global Track" will be set up within the Youth Startup Academy to support new product development and global marketing in collaboration with Olive Young, Amazon, Kolmar, and Cosmax.
Sense of Crisis on the Ground... Government Pledges Continued Support
SMEs participating in the meeting emphasized that, while they are considering diversifying their export markets, it is a critical moment for the government to provide rapid information on U.S. tariff policy trends, expert assistance in developing response strategies, and support for responding to export regulations in other countries. Shim Gunwoo, CEO of Liquid Nation, said, "Systematic government support is needed to address both U.S. tariff measures and the strengthening of cosmetics regulations." Kim Jinwoong, CEO of Hair Plus, stated, "Continuous and long-term support is necessary for our products to succeed as brands overseas."
Oh Youngju, Minister of SMEs and Startups, said, "Although the trend of strengthening global protectionism poses a warning sign for the globalization of K-beauty SMEs, it could also be an opportunity to solidify our position as the world's number one. We will spare no policy support to ensure that K-beauty becomes a driving force for SME growth and national exports."
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