Eco Lips in Cedar Rapids, like many small manufacturers is adjusting to uncertainty with on-again, off-again tariffs

CEDAR RAPIDS — The Eco Lips plant in northeast Cedar Rapids was humming along on a recent weekday morning, its 100 employees producing and packaging lip balm, sunscreen, and other personal care products. One product, the insect repellent Bug Soother, had been featured on that morning’s The View TV show, bringing in thousands of telephone and online orders for the natural insect repellent.

“When we bought Bug Soother (in 2022) it was basically in a 10-state region,” said Eco Lips founder and CEO Steve Shriver. “We are now in Walgreen’s nationwide. We sell a lot in southern states. California and Texas are huge.”

But Bug Soother’s active ingredient is vanilla, produced in commercial quantities only in Vietnam and the island of Madagascar. President Donald Trump’s tariffs on imported ingredients, appearing and disappearing almost daily, could upend Shriver’s plans for continued growth.

“I’m working with Walmart on product placing for 2026, and we manufacture other products for other brands,” Shriver said. “Not knowing what a product is going to end up costing you is absurd.”

Virtually all the ingredients for skincare products — Eco Lips’ and other companies’ — are imported.

“The majority of the ingredients we use in our products cannot be grown in the United States,” said Shriver. “You can’t grow vanilla, coconut oil (here). You might be able to grow them in small areas, but not to the capacity we would need.”

“Economists call these pass-throughs, and they don’t have the capacity to absorb them,” said Anne Villamil, University of Iowa professor and research fellow in economics. “This is a firm that’s doing exactly what the president and the governor want, as far as stimulating domestic manufacturing, and they are going to be hit by tariffs.”

Eco Lips typically contracts with brokers for its vanilla and other raw materials such as beeswax, shea butter, coconut oil, jojoba oil. In a normal business climate, Shriver likes to have a nine- to 12-month supply on hand. As Trump’s inauguration neared, he tried to build his supply.

“Because of all the uncertainty on the tariffs, what we saw was almost panic buying, which drove up the prices even further,” he said. “The new orders for shipping in now, we’re seeing a line item on every invoice we get from our suppliers that shows a tariff.”

Tariffs, many “paused” for 60- or 90-day negotiations, range from 10 percent on Brazilian products (carnauba wax), to 21 percent on West African nations (shea butter, many plant oils and waxes). China, the world’s leading producer of beeswax, the basic component of a stick of lip balm, faces a 10-percent tariff, currently paused.

Villamil noted small companies like Eco Lips and their suppliers have little room to absorb higher costs.

“Even large firms like Walmart, Target, and Amazon have expressed concerns about the input costs increase but it’s especially difficult for small firms,” she said. “Not only are (Eco Lips) a smaller firm, but they’re dealing with very, very small firms that they source from, and those firms do not have capacity to absorb those types of shocks.”

Eco Lips’ use of fair trade, ethically-sourced ingredients further complicates its supply chain.

“They are more expensive to begin with because they’re certified,” Villamil said. “There are a lot of potential suppliers, but they are a very particular supplier for consumers who want that. That’s important for them to deliver.”

“We buy certified organic beeswax from different parts of Asia,” Shriver said. “There is no land big enough in the United States to support our beeswax purchases, because the bees fly and the perimeter around an organic farm needs to be a certain mileage so that chemicals aren’t seeping in. There’s no place in the United States where you have certified organic bees. It’s the thing that holds it all together, so that’s pretty major.”

Shriver, 52, launched Eco Lips in 2003, after selling his first startup, Raining Rose, to local investors. Both firms market their own skincare products and package them for other brands. Raining Rose officials did not return calls or emails seeking comment for this article.

Trying to anticipate the administration’s trade policy, Shriver and his staff have explored other suppliers.

“It’s causing a lot of extra work,” he said. “We are trying to find new suppliers. If we went to an African beeswax versus an Asian beeswax it’s going to have a different melt point, it’s going to have a different color, different scent. We have to source those ingredients, have our quality assurance team test them, then our product development team has to make products that are similar to our last (batch). It’s really disruptive.”

The tariffs may prove short-lived. On May 28, the U.S. Court of International Trade ruled unanimously that Congress, not the president, has constitutional authority to “lay and collect Taxes, Duties, Imposts and Excises,” and to “regulate Commerce with foreign Nations.” But the damage to American producers’ reputation as reliable suppliers may be permanent.

“Firms are very, very concerned about the uncertainty,” Villamil said. “There has been this whole sequence of starts and stops. Obviously, the negotiations with a country like China are going to be very, very complex.”

Most Eco Lips sales are domestic, although the company recently received Mexican government approval for sales there. Villamil noted previous tariff wars have already damaged the state’s major industry.

“(Tariffs in) 2018 on soybeans hurt U.S. farmers particularly in Iowa and Illinois, and it was good for farmers in Brazil,” she said. “Other countries like China have stepped up to invest in Brazil and develop those markets. There will be long-run effects. These price increases are short-term effects. Long-term effects are going to be that firms are going to have to develop new supply chains, and that’s going to be very disruptive.”

“I’m concerned that this could hurt our company, and that would hurt our employees,” Shriver said. “We’re trying to be as proactive as possible, but it’s hard to be proactive when you still don’t know what the outcome is going to be.”