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COO says a tariff hike from 25% to 60% would be

'meaningful'

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Maker of Banana Boat, Hawaiian Tropic has a 'China

dependency'

for sunscreen chemicals

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Edgewell plans to cut costs if tariffs increase

By Jessica DiNapoli

NEW YORK, Nov 7 (Reuters) - U.S. sunscreen-maker

Edgewell Personal Care ( EPC ) will look to ink new two- to

three-year contracts for chemicals from China as it anticipates

"meaningful" tariff hikes if President-elect Donald Trump

delivers on his campaign pledge, Chief Operating Officer Dan

Sullivan told Reuters on Thursday.

Shelton, Connecticut-based Edgewell, along with its

competitors, has a "China dependency" on the chemicals for its

sunscreens, Sullivan said, explaining there is no steady,

alternate supply.

The moves, which Sullivan said are common techniques for

procurement teams, are aimed at limiting the increases in costs

Edgewell would face if Trump imposes higher tariffs on the

chemicals and other goods from China.

The company's sunscreen brands include Banana Boat and

Hawaiian Tropic, sold at retailers like Walmart ( WMT ) and

Target ( TGT ). Rival sunscreens include Kenvue's ( KVUE )

Neutrogena.

Trump has pledged that he would put a 60% tariff on goods

imported from China, resurrecting his policies from his last

term. There is already a 25% tariff on the chemicals for

sunscreen, Sullivan said.

"A tariff increase is a tariff increase. If it's going to go

from 25% to 60%, that's meaningful," he said. "The sun chemical

conversation literally comes down to the reality there are no

alternative sources for the product, at least not scalable,

credible ones. This is not like buying pulp or aluminum, this is

a highly engineered chemical.

"When you're dealing with a category that doesn't have

alternative sourcing, you're going to be super creative and

thoughtful on it," he added. "It's something they're working on

now."

Edgewell's procurement team would look to negotiate

individually with vendors in China and seek new contracts that

lock up a two- to three-year supply of chemicals, since they

cannot find reliable alternate sources, Sullivan said.

To offset the cost of prior tariffs, Edgewell increased

prices on its sunscreens for two summer seasons in the

mid-single digits, Sullivan said. An 8-ounce bottle of Banana

Boat SPF 50 sunscreen on Walmart.com costs $8.97.

The consumer-products maker also cut costs, a strategy it

would lean on again if Trump's new tariffs come to pass,

Sullivan said.

Inflation on the sunscreen chemicals has also fallen, with

Edgewell expecting a low-single digit rise in costs going

forward, down from around 30% during the COVID-19 pandemic, he

said.

U.S. consumers have pulled back on spending after

once-in-a-generation levels of inflation the past several years.

"You have to be thoughtful around the state of the consumer

and the caution we see right now with the consumer," he said.

In Trump's first presidency, Edgewell received an exemption

from tariffs on steel used in its razor blades, Reuters reported

at the time.