Despite the challenges, Adidas reported a sales growth of 7.3% in the first half of the year.
Adidas to Implement Price Hikes Amid Rising US Tariffs Costs of €200m
Adidas to Implement Price Hikes Amid Rising US Tariffs Costs of €200m
The sportswear giant confirms that American consumers will face increased prices due to expensive tariffs.
Adidas has notified its customers that the escalating costs due to US tariffs will lead to a price increase on its products in America, with costs rising by €200 million (£173 million). The German sportswear company revealed that nearly half of its merchandise is produced in Asia, particularly in countries like Vietnam and Indonesia, which are now subjected to newly agreed trade agreements with hefty tariffs. Chief Executive Bjorn Gulden emphasized that while these tariffs will inevitably push up product prices for US consumers, the long-term impact on customer demand remains uncertain, especially if inflation becomes a significant issue.
In recent tariff developments, the US government imposed a 20% tariff on imports from Vietnam, where 27% of Adidas products are made, and a 19% tariff on goods from Indonesia, which accounts for 19% of the company’s production. US businesses importing Adidas products will have to absorb these tariffs, directly affecting pricing. Earlier this year, rival company Nike warned that tariffs could increase its expenses by approximately $1 billion (£730 million), leading to similar price increases for customers.
Despite the tariff challenges, Adidas reported a robust 7.3% increase in sales, reaching €12.1 billion in the first half of this year, with a notable increase in pre-tax profits from €549 million to €1 billion. Footwear sales surged by 9% between April and June, and clothing revenue climbed by 17%. The company faces additional pressure from US tariffs introduced under former President Trump, aimed at encouraging domestic manufacturing. These policies have negatively impacted various sectors, prompting European countries, including Germany, to express their concerns over potential economic damages.
As businesses like Porsche and Mercedes-Benz have begun adjusting to these tariffs, Adidas too must navigate the financial repercussions while attempting to maintain its market position in a challenging economic landscape.
In recent tariff developments, the US government imposed a 20% tariff on imports from Vietnam, where 27% of Adidas products are made, and a 19% tariff on goods from Indonesia, which accounts for 19% of the company’s production. US businesses importing Adidas products will have to absorb these tariffs, directly affecting pricing. Earlier this year, rival company Nike warned that tariffs could increase its expenses by approximately $1 billion (£730 million), leading to similar price increases for customers.
Despite the tariff challenges, Adidas reported a robust 7.3% increase in sales, reaching €12.1 billion in the first half of this year, with a notable increase in pre-tax profits from €549 million to €1 billion. Footwear sales surged by 9% between April and June, and clothing revenue climbed by 17%. The company faces additional pressure from US tariffs introduced under former President Trump, aimed at encouraging domestic manufacturing. These policies have negatively impacted various sectors, prompting European countries, including Germany, to express their concerns over potential economic damages.
As businesses like Porsche and Mercedes-Benz have begun adjusting to these tariffs, Adidas too must navigate the financial repercussions while attempting to maintain its market position in a challenging economic landscape.
