Adidas braces for a $231 million hit from U.S. tariffs, forcing price hikes that could reshape the American sportswear market.
Adidas is preparing to increase prices in the U.S. market after Trump's tariffs imposed by the United States are expected to cost the German sportswear giant an additional $231 million this year according to BBC News. These new trade levies are part of a broader U.S. strategy targeting imports from several Asian countries, complicating Adidas’s global supply chain and impacting its profitability.
Tariff Impact on Adidas’s Supply Chain
Almost half of Adidas’s products are manufactured in Asian countries recently subjected to tariffs by the U.S. government. The largest sources are Vietnam, which accounts for 27% of Adidas’s products, and Indonesia, which produces 19%. Both countries recently entered trade agreements with the U.S., which include new tariffs of 20% on Vietnamese goods and 19% on Indonesian products.
Adidas CEO Bjorn Gulden confirmed these tariffs "will directly increase the cost of our products for the U.S. market," and expressed concerns about how rising prices could impact consumer demand if inflation worsens, according to The Sun. The company anticipates additional costs of about $231 million for the second half of 2025, with tariff rates on footwear imports from Vietnam and Indonesia reaching as high as 46% and 43%, respectively.
Price Hikes and Competitive Pressures
Due to these rising costs, Adidas confirmed it will raise prices for American customers. Its rival Nike also announced price increases earlier this year and warned tariffs could add approximately $1 billion to its expenses, as reported by Business Insider.
Despite the tariff pressures, Adidas posted a 7.3% increase in sales to €12.1 billion (approximately $13.3 billion) in the first half of 2025, with pre-tax profits nearly doubling from €549 million ($602 million) to €1 billion ($1.1 billion). Footwear sales rose 9% in the second quarter, while clothing revenue jumped 17%, highlighting continued strong demand amid cost challenges, according to Vogue Business.
Adidas’s modern store exterior reflects its premium image as the brand navigates rising tariffs and market challenges.
Wider Industry Impact of U.S. Tariffs
President Trump’s tariff strategy has targeted many global trading partners, including the European Union, aiming to encourage more domestic manufacturing. Earlier this week, the U.S. and the EU agreed to impose a 15% tariff on all imports, including automobiles, ahead of an August 1 deadline, as noted by Vogue Business.
However, major EU economies including Germany have criticized the deal. German Chancellor Friedrich Merz said it would inflict “considerable damage” on both the U.S. and Germany, according to the same source.
Strategic Outlook Amid Tariff Challenges
While Adidas faces cost pressures from tariffs, its robust sales growth demonstrates resilience. The company continues to navigate inflationary pressures and supply chain shifts, focusing on maintaining brand strength in the U.S. and globally.
FAQ's/People Also Ask
What caused the $231 million tariff estimate?
Adidas revised its 2025 cost forecast due to extended tariffs on goods from Vietnam and Indonesia, which are major production hubs for the company.
How do tariffs affect Adidas compared to competitors?
Both Adidas and Nike are impacted by U.S. tariffs, with Nike expecting around $1 billion in additional costs. Adidas’s tariff-related expenses are comparatively smaller but still significant.
Can Adidas offset these costs?
Adidas plans to raise prices in the U.S. market to help cover the increased expenses from tariffs, but there is uncertainty about how this will affect consumer demand.
What is Adidas’s financial outlook amid tariffs?
Despite tariff-related cost increases, Adidas reported strong sales and profit growth in the first half of 2025, signaling robust brand demand even as it manages inflationary challenges.
Final Thoughts
Adidas’s $231 million tariff-related cost increase underscores the tangible impact of U.S. trade policies on global brands. As tariffs reshape supply chains and raise prices, Adidas must balance cost pressures with maintaining market competitiveness and consumer loyalty in a challenging economic environment.
