Two months ago, Adidas CEO Kasper Rorsted voiced concerns about the potential threat of a currency war between the United States and China, arguing that a monetary standoff between the two economic superpowers could be even worse for the industry than their ongoing trade war.
But today — with the first round of the fourth tranche of tariffs having already hit consumer goods on Sept. 1 — the athletic giant’s chief is admitting larger concerns about the tariff dispute. Even more, the additional 15% import tax on the second round of the fourth tranche is scheduled to hit footwear, apparel and accessories in mid-December.
In an interview with CNBC, Rorsted explained that the “much more serious [concern] is if the American consumer has less money to spend.” In turn, “he or she will spend less money on all products, including ours. That’s the worrying one.”
The exec’s comments come a week after global consulting firm AlixPartners released a report noting a dramatic drop-off in consumer confidence over the economic outlook. According to the data, only 41% of Americans attested to better financial health today from a year ago — down from 47% in a separate study conducted in 2018. Meanwhile, 36% of respondents said they felt positive about the economic outlook, while last year’s confidence in the U.S. economy was at 45%.
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In its second-quarter earnings report announced in early August, Adidas noted that China drove a large chunk of its revenue gains during the period, rising 14% from the previous year.
“Having the two biggest economies in the world right now at odds with each other has a negative impact on both economies,” Rorsted said during the subsequent conference call with investors.
However, the company had already begun diversifying its supply chain, moving much of its manufacturing to Vietnam and other countries in the past decade. Today, only 20% of its sourcing comes from China — most of which is produced for the domestic market and accounts for 25% of the brand’s sales.
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