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The tariffs President Donald Trump has long threatened to impose on U.S. imports finally hit on Tuesday.
Imports from Canada and Mexico are getting 25% tariffs (postponed for one month), along with an additional 20% on all Chinese goods. In response, all three countries announced retaliatory measures.
For consumer-facing companies, it means products made in those countries that come into the U.S. will cost them more. Whether those companies will pass on the added costs to their customers is an open question for now. (Target’s CEO said tariffs will raise prices U.S. consumers pay for fruits and vegetables imported from Mexico.)
When the first Trump Administration implemented tariffs on Chinese imports, it forced many sportswear retailers to shift their production from China to countries like Indonesia and Vietnam.
For instance, Swiss sneaker and sportswear company On Holding, which reported strong Q4 earnings Tuesday, manufactures the majority of its products in Vietnam and has little exposure to tariffs on Chinese imports. The company sourced just 7% of its apparel and accessories from China last year, while 90% of its footwear is produced in Vietnam and 10% in Indonesia.
“These factors give us confidence in On’s ability to reach its 2025 guidance, and even exceed them, despite an uncertain macro environment,” Cristina Fernández, retail analyst at Telsey Advisory Group, wrote in a note.
Similarly, Adidas, which reported Q4 sales that exceeded expectations Wednesday, would be minimally burdened by tariffs on Chinese goods because only 3% to 4% of the goods it imports to the U.S. come from China. (Most of the goods it produces in China serve the Chinese market.)
We don’t know yet how exactly Trump’s new trade war will play out and affect individual sportswear companies and their consumers, but one thing is clear: It’s on the minds of every CEO right now.
Here’s what sneaker and sportswear retailers have been saying about tariffs in interviews and on recent earnings calls, and how their business lines could be impacted.
In an interview with Front Office Sports, On co-founder and co-chairman David Allemann brushed off any potential concern about tariffs for two main reasons: It makes most of its shoes and apparel outside of China, and it’s a premium brand that has pricing power.
“At the moment we don’t see that we are affected in any way. We have production especially in Vietnam and in Indonesia, and then partly in Europe as well. Our focus goes very much in being a premium sports brand. So for everything we do, we have a very premium positioning and that also gives us the ability to drive premium margins. And so that’s where our energy is and gives us quite a bit of insulation against price pressure.”
In its earnings call following its Q4 results Feb. 25, CEO James Zheng of Amer Sports, a Finnish conglomerate that owns Salomon, Arc’teryx, and Wilson, addressed the question of tariffs, saying its Wilson brand, which makes balls and rackets, could get hit:
“I would also like to provide an update on our sourcing exposure in light of the contemplated new tariffs on imports from China, Canada, Mexico and Vietnam. In 2024, sourcing to the U.S. from China, Vietnam, Canada and Mexico combined represented approximately 20% of global sourcing. China and Vietnam make up the majority of this exposure, while sourcing from Canada and Mexico to the U.S. accounts for less than 1% of the total. Similar to when we experienced a rise in China tariffs in 2018 and 2019, our ball and racquet segment will be most impacted. However, given our various mitigation levers including price increases, supply chain flexibility … we believe we are well equipped to weather a variety of tariff scenarios.”
Adidas reported a 19% increase in fourth-quarter revenues Wednesday to $6.34 billion, exceeding expectations. On the earnings call, CEO Bjørn Gulden gave a slower revenue growth outlook for 2025, in part because of uncertainty in the U.S. He suggested that if the U.S. broadened its tariffs to more countries—beyond China, Mexico, and Canada—to include Vietnam, Adidas could be indirectly affected through inflation. Will that cause U.S. consumers to spend less on Adidas footwear and apparel?
“When it gets to the U.S., again, I don’t know where you’re sitting, but there is of course now the big question mark, should he put tariffs only on China? Then we will not really be impacted in the beginning from our own margin because we don’t source from China. But the people that do source from China will, of course, raise prices and then you have inflation, and when inflation goes up in a segment then volumes go down, so it might also have an impact on us. … I think you need to give us a quarter or two before we start to talk about what the potential [is]. We feel very comfortable with this guidance.”
Foot Locker reported mixed Q4 results Wednesday with revenue coming in at $2.24 billion, below the forecast of $2.32 billion. Most of the products the chain sells are from other brands, like Nike, Adidas, and Under Armour—which means they would typically absorb the cost of the tariffs. Still, the tariff situation is “rapidly evolving and it’s on consumers’ minds,” CEO Mary Dillon said.
“We’re watching it closely, of course, how this would impact overall costs, and pricing for consumers across multiple categories could have impact. I would say, first of all, the industry has done some good work over the years to diversify portfolio outside of China. So that’s an advantage. And also I would say that our direct exposure is pretty moderate to small.”
CFO Mike Baughn added: “Within our direct business, we do have some modest exposure to China. It’s about half of our private label business. But for total Foot Locker, it’s really a low-single-digit percentage of our sales. We also do have some minor exposure tied to fixtures across China, Mexico and Canada. Pretty modest impact to how we’re thinking about our capital plans this year and our return profile for those investments are still very healthy. So we’ll continue to monitor that as we go.”
Under Armour reported better-than-expected Q3 earnings Feb. 6, posting a 6% drop in revenue to $1.4 billion, compared with analysts’ consensus of a nearly 10% decline. CEO Kevin Plank concluded his comments by addressing the prospect of tariffs:
“It’s important to note that Under Armour sources approximately 3% of its goods imported into the U.S. from China and even less from Mexico, and we have no manufacturing relationships in Canada. Given these facts, the current tariff proposals are not expected to impact our business significantly. However, we will stay vigilant and if these parameters change or additional countries are included in this tariff program, we will promptly reassess accordingly.”
Skechers reported Feb. 6 that its Q4 profits grew 13.9% and sales rose 12.8% to $2.21 billion, along with record full-year sales. On its earnings call, CFO John Vandemore said the possibility of tariffs on goods from China “has impacted our visibility,” and suggested the company would likely respond with “the reallocation of certain production, vendor concessions, and pricing.”
Vandemore said, “We’ve talked for a long time about the strategies we employed last time we talked about tariffs, which ironically enough was about four years ago. And we’re going to apply the same tactics, and that involves in some situations redirecting origin and manufacturing relationships to avoid, to optimize for tariff structures. We’re certainly going to go have conversations with our vendors in some respects foreign exchange, and the strengthening dollar helps with that. And then we’ll look at price. I think all of those have to be tools available to us if these rates stay in effect, or if the worst case happens and things go forward more severely. So we’re prepared to deal with those. We will deal with those. We have a little bit of time because the inventory we have on hand today is cleared and it won’t be subject to those higher rates. And as we’ve seen, it seems like these policies can change relatively quickly.”
On March 11 Dick’s Sporting Goods reported positive fourth-quarter results but warned that profits for 2025 would come in lower than analysts expect because of the current “dynamic macroeconomic environment,” the company said in its earnings release. In an interview with CNBC, executive chairman Ed Stack said that although the company’s exposure to China, Mexico, and Canada for sourcing is small, tariffs could have a negative impact consumer prices in general.
