Increased prices anticipated in the U.S. market for Adidas products due to implementation of tariffs
Rewritten Article:
Higher Tariffs Ain't No Joke for Adidas 🛍️宏大战税收
Adidas CEO Bjørn Gulden ain't messin' around when he says the escalating tariffs are gonna hit 'em where it hurts - in their wallets. He's right - these tariffs are stealing bread from the table of US consumers.
Why you ask? Well, ol' Bjørn's company can't hardly produce a thing Stateside, so these higher tariffs are gonna make all their products more expensive for the US market. Ouch, that's a stinger.
Now, Adidas ain't afraid of a little international trade wrangle, they've already slashed exports from China to the US to next to nothing. But those tariffs ain't just affecting China, they're hammering other countries too. Bjørn pointed out that tariffs are causing some major problems for other economies.
In the first quarter of 2025, Adidas' revenues grew like a weed, reaching 6.15 billion euros. Operating profit jumped up to 610 million euros, and net profit more than doubled to 436 million euros. Now that's a rowdy party. The driving force behind this growth was a double-digit increase in Adidas footwear sales, followed by an 8% boost for clothing sales and a 10% surge for accessories.
Despite the uncertainty caused by these US tariffs, Adidas ain't backing down - they're still predicting a bang-up year with operating profit soaring to 1.7-1.8 billion euros by the end of 2025. They're even expecting more market share and sales growth.
On April 9, a "reciprocal" tariff war broke out between the US and several countries. Just a few hours later, US President Donald Trump suspended the imposition of tariffs on more than 75 countries that hadn't retaliated against the US for 90 days and set a base rate of 10%. This decision didn't touch China, but with previously imposed tariffs, the effective rate for China now stands at a hefty 145%, as per the White House. Beijing retaliated by jacking up tariffs on US goods to 125% starting April 12. On April 22, Donald Trump hinted at the possibility of striking a trade deal with China.
(For more news on this tariff dust-up, swing by our Telegram channel @expert_mag)
Enrichment Data:
Overview:Adidas is feeling the squeeze from tariffs weighing down on their US operations. Here's the lowdown on what's going on:
Current Concerns:
- Production: Adidas has reduced exports from China to the US to a bare minimum to dodge high tariffs on Chinese goods. However, the broader increase in US tariffs on imports from other countries (e.g., Vietnam, where sourcing has grown post-China tariffs) remains a lingering risk.
- Financial Performance: Despite the tariff hassles, Adidas reported a killing Q1 2025, with currency-neutral sales surging 13% year-over-year (17% growth for Adidas brand excluding Yeezy). Operating profit skyrocketed 82% to €610 million, fueled by double-digit growth across all markets.
- Market Share: Sales in North America bumped up 13% (excluding Yeezy), reflecting strong demand. However, the company has held tight to their 2025 financial targets due to the uncertainty caused by tariffs.
Potential Future Impacts:
- Price Increases: Adidas issued a warning - higher tariffs might mean bigger bills for US consumers, though the exact price hike remains unclear. CEO Bjørn Gulden expressed that costs could be passed on to customers if paused tariffs (e.g., Vietnam’s 46% tariff) are reinstated.
- Profit Margins: While 2025 guidance remains unchanged (high single-digit sales growth, operating profit of €1.7–1.8 billion), Adidas admitted to a "wider range of possible outcomes" due to tariff volatility.
- Strategic Sourcing: To mitigate tariff risks, the company may need to diversify production beyond China and Vietnam. This could involve short-term costs and logistical challenges.
- Adidas CEO Bjørn Gulden has warned that escalating tariffs could lead to increased product prices for the US market, potentially impacting the wallets of consumers.
- Despite the reduction in exports from China to the US, broader tariffs on imports from other countries, such as Vietnam, pose a lingering risk for Adidas.
- In the first quarter of 2025, Adidas reported a substantial growth in revenue and profit, despite the challenges posed by tariffs.
- To mitigate the risks associated with tariffs, Adidas may consider diversifying its production beyond China and Vietnam, potentially incurring short-term costs and logistical challenges.
