e.l.f. Beauty shares have plunged 20% since Trump's inauguration, but the tariff fears are overblown

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e.l.f. Beauty, one of the best-performing retail names of the past few years, has underperformed lately due to fears that tariffs on China-made products will severely impact its business. As you can see below, the selloff accelerated just before Trump’s inauguration, with $ELF dropping over 20% between January 17 and January 27.

This drop seems like an overreaction to the new President’s tariff threats. With 80% of its production based in China, e.l.f. is vulnerable to potentially high tariffs and a trade war. However, imposing high tariffs on China is quite unlikely due to the negative consequences for major US-based companies like Apple, while relatively modest tariffs of 10% or so are unlikely to alter e.l.f.’s growth story. Let’s see why.

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