Tariff Shock: Adidas Takes a Hit, Prices to Surge for US Shoppers

Adidas faces significant financial pressure as US tariffs on imported goods are expected to add an eye-watering €200 million (£173 million) to its costs. CEO Bjorn Gulden confirmed that this increase will force the company to raise prices for consumers in the United States. The sportswear brand sources nearly half of its products from Asian countries, specifically Vietnam (27%) and Indonesia (19%), which have both recently struck trade deals with the US that include steep tariffs: 20% on Vietnamese goods and 19% on those from Indonesia.

During a presentation of its latest financial performance, Adidas noted the direct impact of these tariffs on their pricing strategies, admitting uncertainty about potential demand fluctuations due to inflation. The company’s rival, Nike, also plans to raise prices, anticipating tariffs could add about $1 billion (£730 million) to their costs. Despite these challenges, Adidas reported a 7.3% increase in sales reaching €12.1 billion during the first half of the year, with pre-tax profits soaring from €549 million to €1 billion. Footwear sales particularly thrived, with a 9% increase in the second quarter.

The backdrop to these developments is former President Trump’s strategy to impose higher tariffs on global trading partners to encourage domestic manufacturing. Recently, he established a 15% tariff on EU imports, including cars, which has elicited strong opposition from major EU economies, particularly Germany. High tariffs are already being felt by German companies, with Mercedes-Benz projecting nearly €420 million in tariff-related expenses for the year, leading to a staggering 70% drop in second-quarter profits. Similarly, Porsche has implemented price hikes up to 3.6% to offset increased import taxes.

In the UK, Aston Martin has warned of slim profits due to the levy, while Stellantis, the parent company for brands like Peugeot and Jeep, has reported €300 million in losses attributed to these tariffs. The cascading effects of these tariffs are beginning to reshape the landscape of international trade and pricing within the industry, as companies navigate the financial repercussions.