Adidas confirmed its 2025 outlook but warned that U.S. tariffs imposed by President Trump will raise prices across its products in the American market. This policy hinders planned target increases and strains global supply chains, potentially curbing growth and increasing consumer costs.
Strong Results, Uncertain Outlook
Adidas reported a first-quarter 2025 net profit of €170 million, surpassing analyst expectations (€159 million). Revenues rose 8% to €5.46 billion, with a 7% increase in the U.S., a key market. Demand for products like Samba and Gazelle sneakers remains robust despite tariff uncertainties. However, the company cautioned that plans to raise 2025 targets were paused due to the impact of U.S. tariffs.
Tariff Impacts on Prices and Supply
The Trump administration imposed 145% tariffs on Chinese imports starting April 2, sharply increasing goods’ costs. Adidas, with significant production in Asia, expects these added costs to pass to consumers, raising prices for sneakers, apparel, and other products. Additionally, Trump imposed 46% tariffs on Vietnamese imports, another key Adidas manufacturing hub, though these were temporarily reduced to 10% for 90 days.
- Rising Costs: Prices for some products, such as athletic footwear, have increased by up to 20%, pressuring margins.
- Reduced Imports: Since tariffs began, freight shipments from China to the U.S. have dropped by up to 60%, threatening inventory shortages and empty shelves.
- Production Shifts: Adidas, alongside firms like Nike and Puma, is exploring relocating production, but this raises logistics costs and complicates supply chains.
Market and Competitor Reactions
Adidas shares in Frankfurt dipped 0.7% after the results, reflecting investor concerns over tariff impacts. Competitors like Nike and Puma face similar challenges, relying heavily on Asian production. Nike has already signaled potential price hikes due to tariffs. Reuters reports that most economists warn of a global recession risk from Trump’s tariffs, which undermine trade confidence.
Adidas’ Future Strategy
Adidas plans to diversify production and reduce reliance on China and Vietnam. The company is also exploring strategic preemptive inventory purchases, as Amazon does, to mitigate price impacts. Still, CEO Bjørn Gulden emphasized, “We’ll all face higher costs until this is resolved.” Analysts at Bloomberg Economics are skeptical about a quick U.S.-China trade deal, meaning uncertainty may persist.
China and Global Responses
China, Adidas’ second-largest market, has intensified outreach to countries like Japan and Europe to build alliances against Trump’s policies. Chinese Premier Li Qiang called for a coordinated response, potentially complicating new U.S. trade deal talks.
Outlook and Risks
Estimates suggest continued tariffs could further reduce imports and raise U.S. prices by 10–15% in the second half of 2025. This may dampen demand for Adidas’ premium products, particularly athletic footwear. Yet, the company remains optimistic, banking on its strong brand and customer loyalty.
- Key Risks:
- Further escalation of the U.S.-China trade war.
- Supply chain disruptions due to inventory shortages.
- Declining demand due to higher prices.
Adidas faces the challenge of balancing growth and profitability in an environment disrupted by global trade tensions, with consumers likely facing higher prices.
