Frankfurt (Germany) (AFP) – German sportswear giant Adidas on Tuesday warned that US President Donald Trump’s tariffs will increase prices for its products in the United States, and the hardline trade policies could dent its ongoing recovery. The firm makes a large chunk of its goods in Asian countries that Trump has singled out for running hefty trade surpluses with the United States, including China, which is facing the highest US levies.
CEO Bjorn Gulden said Adidas had reduced its exports from China to the United States “to a minimum,” but added that the group was still “somewhat exposed to those currently very high tariffs.” “What is even worse for us is the general increase in US tariffs from all other countries of origin,” he said, adding that they “will eventually cause higher costs for all our products for the US market.” He said it was “currently impossible” to work out by how much prices might rise or conclude what impact this might have on consumer demand.
Much of Adidas’s production is based in Asian countries including Vietnam, Indonesia, and Bangladesh. The United States is a major market for Adidas, and last year the group made over a fifth of its sales there. The US tariffs have dealt a hefty blow to the company just as it was getting back on its feet following a torrid period triggered by the end of its lucrative tie-up with US rapper Kanye West. The group developed the popular Yeezy line of trainers with West but halted the collaboration after the rapper sparked anger with anti-Semitic outbursts online, robbing Adidas of a key revenue stream.
From January to March, Adidas reported that its net profit more than doubled to 428 million euros ($488 million), beating analyst expectations, as sales rose to 6.1 billion euros. Gulden said that, after such a strong performance, the group would typically hike its outlook but had decided against doing so due to the tariff uncertainty. The group stuck to its guidance, predicting operating profit of 1.7 billion to 1.8 billion euros for the year. However, the CEO added that Adidas recognised that there were “uncertainties that could put negative pressure on this later in the year.”
© 2024 AFP
