The Blubber

Adidas announced Tuesday that the cost of its products in the U.S. will rise, a consequence of tariffs imposed by former President Donald Trump. The German sportswear leader emphasized that its lack of domestic production leaves it vulnerable to these added import duties.

“Since we currently cannot produce almost any of our products in the U.S., these higher tariffs will eventually cause higher costs for all our products for the U.S. market,” CEO Bjørn Gulden said in a statement accompanying Adidas’ Q1 earnings release on April 29.

Adidas, widely recognized for its iconic sneakers like the Samba and Ultraboost, manufactures most of its footwear and apparel in countries such as China, Vietnam, Indonesia, India, and Cambodia. China remains under a 145% import tariff, while the other nations were facing new tariffs between 26% and 49% before Trump's 90-day postponement, which began on April 9.

The company has already signaled that it will raise product prices in response to these trade policies.

Despite having significantly scaled back its exports from China to the U.S., Gulden noted the company is still affected by high tariffs on those remaining imports. “Although we had already reduced the China exports to the U.S. to a minimum, we are somewhat exposed to those currently very high tariffs,” he said. “What is even worse for us is the general increase in U.S. tariffs from all other countries of origin. Cost increases due to higher tariffs will eventually cause price increases.”

As the company navigates this uncertainty, Gulden said Adidas would not issue a forward-looking profit forecast, citing market volatility. This comes even as the company reported a strong quarter.

In the U.S., Adidas reported a 3% increase in sales during the first quarter. Excluding the discontinued Yeezy line, which was impacted by the termination of its partnership with Kanye West, sales grew by 13%.

Globally, the brand saw double-digit growth across several markets—26% in Latin America, 14% in Europe, and 13% in China, Japan, and South Korea. Net sales rose 12.7%, and operating margins climbed by 3.8 percentage points to 9.9%, bringing in an operating profit of €610 million ($695 million USD)—an 82% year-over-year jump.