The global trade war sparked by the Trump administration is delivering a direct financial blow to one of the world’s largest sportswear brands. Adidas has confirmed it expects to lose a staggering €120 million in 2025 due to hefty new US import tariffs, with the most significant pain set to hit in the final quarter of the year.
The announcement from Adidas CEO Bjorn Gulden highlights the vulnerability of global brands with supply chains concentrated in Asia. With over 90% of its products manufactured in the region, Adidas is heavily exposed to the levies imposed on goods entering the United Statesa market that accounted for more than a fifth of its sales last year.
A Double Blow in North America
The tariffs are biting at an already challenging time for Adidas in the region. The company reported a 5% decline in North American sales for the third quarter, dropping to 1.3 billion euros. This slump is attributed to a double-whammy: the financial drag from the tariffs and the continued fallout from discontinuing its highly profitable Yeezy sneaker line.
The Yeezy brand, a collaboration with rapper Ye (formerly Kanye West), was abruptly terminated after he made a series of antisemitic remarks, leaving a significant hole in the company’s revenue and brand appeal.
A Cautious Outlook and a New Game Plan
While the projected tariff hit of €120 million is lower than the €200 million warning the company issued in July, CEO Bjorn Gulden cautioned that the full “indirect impact” remains hard to gauge as rising prices potentially dampen consumer demand.
In response, Adidas is embarking on a major strategic push to reinvigorate its presence in the crucial US market. The company is investing heavily in US college sports, a traditional stronghold of its arch-rival, Nike.
Gulden was pragmatic about the competitive landscape, stating, “The distance to Nike in the US is so big that we cannot have the ambition of being number one.” However, he laid out an ambitious growth target, adding, “But we should have the ambition to double our business,” without providing a specific timeline.
Despite the headwinds, Adidas recently raised its full-year profit forecast, suggesting that cost management and strong performance in other regions are helping to cushion the blow. Nevertheless, the tariff warning signals that political decisions in Washington are now a direct and costly line item on the balance sheets of global corporations.
{Source: TheCitizen}
