Anticipated $230M tariff impact on Adidas in the latter part of the year
In the second quarter of this year, Adidas, the German multinational corporation, reported a 9% increase in its largest category, footwear. This growth was accompanied by a 17% increase in the company's apparel category, marking a significant currency-neutral growth for Adidas.
Despite these positive figures, Adidas shoppers may not be aware of the increase in product prices due to tariffs. In order to handle these impacts, Adidas has devised a strategic approach that includes diversified supply chains, nearshoring production, premium pricing strategies, and supply chain efficiency improvements using AI and blockchain technologies.
Specifically, Adidas is mitigating increased U.S. tariffs (up to 46% on Vietnamese and 43% on Indonesian imports) by shifting manufacturing closer to the U.S., notably nearshoring production to Mexico and Brazil, and localizing production in Southeast Asia. It is also employing supply chain diversification to reduce dependency on tariff-exposed countries.
Adidas intends to raise prices strategically, focusing on premium lifestyle products to maintain strong gross margins (around 50%) and sustain cultural relevance. The company expects tariff-driven costs to add about $231 million in 2025, which it plans to partly offset by not only price increases but also sharing cost burdens with suppliers and retailers and launching higher-priced new products.
In comparison, Nike appears less resilient in managing tariff pressure in 2025. Nike's gross margins are lower (around 44%) and the company is experiencing more pronounced sales declines under the same tariff regime. Adidas leverages stronger brand loyalty and a more fashionable product portfolio (e.g., retro styles like Samba and Campus) to better absorb the cost increases and maintain growth momentum, while Nike is reportedly leading with price increases but has less effective supply chain diversification and margin protection than Adidas.
Key contrasting points:
| Aspect | Adidas | Nike | |-----------------------------|-----------------------------------|--------------------------------------| | Tariff cost handling | Supply chain diversification, nearshoring (Mexico/Brazil), localized production, AI/blockchain efficiency | Less diversified, more exposed to tariffs | | Pricing strategy | Premium pricing with gradual increases, sharing tariff costs with suppliers/retailers, new higher-priced product launches | Leading with price increases but less margin cushion | | Gross margin (2025) | Approximately 50% | Approximately 44% | | Brand loyalty (U.S. market) | Stronger (35% satisfaction) | Lower (28% satisfaction) | | Market position under tariffs | Expanding market share and higher growth guidance (7-8% sales growth) | Experiencing sales declines |
As Adidas maintains its full-year outlook for the year, it has warned of increased volatility and risk due to the Trump administration’s policies. To capitalise on its competitors' sales declines, Adidas is increasing marketing investments.
Moreover, Adidas is making inroads in its local strategy, especially in the U.S., by signing American athletes and planning a more meaningful presence in college sports. Accessories grew by 7% in Q2 for Adidas, and the company has not canceled any orders.
Notably, Adidas is dropping new products at higher prices to offset the costs of tariffs. The demand in the U.S. has not decreased yet, but the price increases have not been implemented either. Adidas cited a strong euro as a factor for slower growth in currency-neutral terms, but sales were up 12% excluding Yeezy sales and 8% including them.
In the face of tariffs, Adidas will not pass on these costs to consumers in markets outside the U.S. CEO Bjørn Gulden stated that Adidas expects a 200-million-euro increase in product costs due to tariffs in the second half of the year.
Adidas is also taking advantage of local sports trends like pickleball in the U.S. and padel in Europe. No retailer cancellations have been seen by Adidas yet. Nike is expected to lead price increases in the U.S. market, with Adidas following.
[1] Adidas's tariff-mitigation strategy [2] Adidas's tariff-driven cost management [3] Adidas's resilience compared to Nike [4] Adidas's financial performance under tariffs
- Adidas is handling tariff impacts through strategies like diversified supply chains, nearshoring production, premium pricing, AI and blockchain technology efficiency, and supply chain diversification.
- Adidas is managing tariff-driven costs by shifting production closer to the U.S., localizing production in Southeast Asia, increasing prices strategically, sharing cost burdens with suppliers and retailers, and launching higher-priced new products.
- Adidas demonstrates greater resilience compared to Nike in managing tariff pressure, with stronger brand loyalty, higher gross margins, and a more fashionable product portfolio.
- Despite tariffs, Adidas's financial performance under tariffs shows an expanding market share, higher growth guidance, and a 12% sales increase excluding Yeezy sales and an 8% increase including them in Q2.
