Following a recent US Trade Representative hearing examining the future of the United States-Mexico-Canada Agreement, the cosmetics and personal care products industry is underscoring what it says is at stake for North American trade and regulatory alignment.
In a Dec. 5 statement, the Personal Care Products Council reaffirmed its support for the agreement, stating that it “has strengthened U.S. manufacturing, protected critical supply chains and fostered regulatory cooperation that empowers U.S. companies to compete and thrive globally,” the organization said.
The industry’s position is grounded in measurable economic outcomes tied to the agreement. “In 2024, trade among the three countries in the industry reached $10.1 billion, a 39% increase from 2020, and exports to Canada and Mexico exceeded those to China and the EU combined,” PCPC said, pointing to the role of tariff-free trade and aligned regulatory frameworks in supporting cross-border supply chains.
At the center of the discussion is the USMCA’s Cosmetics Annex, which PCPC described as “the first of its kind” in establishing science-based regulation, eliminating duplicative testing and advancing shared priorities such as innovation, transparency and avoiding unnecessary animal testing.
In its statement, the organization emphasized that preserving these provisions is “essential to safeguarding the economic progress, manufacturing investment and consumer trust” that underpin the North American cosmetics and personal care products market.
In this CosmeticsDesign US Q&A, Natalie Obermann, vice president of global strategies at PCPC, discusses why the Cosmetics Annex has become foundational to regulatory convergence across the United States, Canada and Mexico and how changes to the agreement could affect manufacturers and suppliers operating across the region.
CDU: Why is the USMCA, and specifically the Cosmetics Annex, so critical to maintaining regulatory alignment and trade efficiency across North America’s cosmetics and personal care markets?
Natalie Obermann (N.O.): The Cosmetics Annex is the backbone of regulatory convergence in North America. It ensures risk-based regulation, prohibits pre-market approvals and streamlines labeling and notification requirements—all of which reduce costs and facilitate trade.
These commitments have created a predictable, science-based regulatory environment that supports innovation and competitiveness. Without this alignment, cosmetics and personal care products companies could face duplicative and inconsistent requirements across borders, undermining the integrated supply chains that make North America one of the most innovative markets for cosmetics and personal care products globally.
CDU: What potential consequences could manufacturers and suppliers face—both short- and long-term—if the agreement is not retained or is significantly altered?
N.O.: North America’s cosmetics and personal care products sector is built on deep integration enabled by the United States-Mexico-Canada Agreement (USMCA). With minimal tariffs, companies have created efficient cross-border supply chains, leveraged specialized manufacturers in all three countries and ensured consumers have reliable access to safe, high-quality products.
Weakening the USMCA could unravel these efficiencies, raise costs, disrupt manufacturing, limit product choice and make North American companies less competitive globally.
The USMCA has enabled a 39% increase in regional trade since 2020, with U.S. exports to Canada and Mexico surpassing those to China and Europe combined. Losing these advantages would jeopardize billions in trade and thousands of jobs.
CDU: How does the Cosmetics Annex streamline labeling, registration, and compliance for companies operating in the U.S., Canada, and Mexico, and what could happen to these processes without it?
N.O.: The Cosmetics Annex simplifies how companies bring products to market in the United States, Canada and Mexico by creating a consistent, risk-based regulatory approach. It streamlines requirements in several important ways:
- No pre-market approvals for routine cosmetic products. Companies only face authorization requirements when a real and specific health or safety concern is identified.
- No redundant testing. Shade or fragrance extensions are not subject to new testing unless there is a safety reason.
- Simplified labeling. Countries cannot require notification or registration numbers on labels, and companies are allowed to add any required information after importation.
- No need for certificates of free sale or home-country approvals. These documents are no longer prerequisites for entering another North American market.
- Consistent ingredient terminology. All three countries recognize the importance of using INCI names to support transparency and compliance.
- Limits on animal testing. Companies are not required to conduct animal tests unless no validated alternative exists.
The Appendix between the United States and Canada adds further efficiencies for products at the cosmetic–drug interface by removing quarantine and confirmatory re-testing, saving industry significant costs and allowing free distribution of samples such as toothpaste and sunscreen.
The Annex ensures predictable, aligned processes across North America. Without it, companies would likely face more complex compliance obligations, higher costs, and slower access to all three markets.
CDU: From a supply chain perspective, how might disruptions to the USMCA affect ingredient sourcing, packaging imports, or finished-goods exports for U.S. cosmetics companies?
N.O.: Disruptions would reverberate across the entire supply chain. Tariffs or new rules of origin could raise costs for finished products and critical inputs like packaging and raw materials.
Divergent labeling and formulation requirements would force companies to create country-specific packaging and products, increasing complexity and inventory costs. These inefficiencies would slow innovation and reduce the agility that U.S. manufacturers rely on to compete globally.
CDU: What is PCPC’s message to policymakers ahead of the USTR hearing, and how can industry stakeholders best support efforts to preserve the USMCA and its benefits for the sector?
N.O.: PCPC strongly supports a 16-year extension of the USMCA and urges USTR to preserve the agreement’s core market-opening provisions, including tariff-free trade for USMCA-compliant products, the Cosmetics Annex and commitments on regulatory cooperation and good regulatory practices.
Policymakers should safeguard these gains and ensure that the three countries continue strengthening the Annex by advancing work on further INCI alignment and supporting U.S.-Canada collaboration on tamper-evident packaging and fact table alignment.
PCPC also emphasized the need to maintain tariff exemptions for ingredients, packaging and finished products and to prevent the return of burdensome retesting requirements.
The cosmetics and personal care products industry will continue to engage the Trump Administration and Congress and champion the economic and consumer benefits of the USMCA, ensuring North America remains a leader in cosmetics and personal care products innovation and trade.
