When he discussed the potential impact of looming taxes on his company on Tuesday, Amer Sports CFO Andrew Page made no meat terms.
On the bank’s income call, Page stated that” we have some degree of flexibility to change our supply chain,” but that’s where we’ll turn to in the event that tariffs come up.
It’s a conversation happening across the U. S. enterprise earth. President-elect Donald Trump has promised to impose significant levies on some foreign goods, most importantly a proposed 60 % tax on those from China. It has raised questions about how to pay those tariffs and whether to quickly alter existing supply chains for businesses like Amer ( NYSE: AS ) that manufacture sportswear and other hardgoods in China and sell them in the United States.
” It’s the topic that everyone in the industry is talking about”, Todd Smith, CEO of the Sports &, Fitness Industry Association, said in an interview. ” And there’s hardly a magic solution, there’s no special answer”.
Amer’s stance—that any extra costs will be passed along to the consumer—is exactly what the SFIA fears most. When rates go up, according to Smith, fewer citizens in the U. S. have access to sporting equipment, clothes and equipment. The health of Americans, he said, is the “hidden charge to taxes”.
According to Smith, “whatever advantages one might assume could result from tariffs, such as jobs moving to new locations or manufacturing returning to shore,” those advantages will be far overshadowed by the negative effects that we’re going to experience from lower medical costs, both physically and mentally, as fewer people are able to access sports and fitness.” That will cost us a lot more income and cause far more devastation than any tariff-related benefits, according to the statement.
To demonstrate the threat, Smith provided two figures. In 2017, it cost$ 115 to get everything needed for one child to play sports. That’s a game, even, shin guards and studs. Six years later, the price has risen 46 % to$ 168.
Also, household income has a significant impact on youth membership. Only 25 % of children who live in households with incomes under$ 25, 000 play sports, up from 40 % for those who make more than$ 100,000. Income is” the biggest driver of first participation”, according to the Aspen Institute’s Project Play.
If tariffs are implemented, Amer wo n’t be the only ones to raise prices. When the sneaker-maker ( NYSE: ONON ) reported earnings earlier this month, co-CEO and CFO Martin Hoffmann made an analogous claim, though much less direct. When they release their earnings next month, Nike ( NYSE: NKE ) executives almost certainly will talk about their plans.
That said, there’s also a lot of uncertainty surrounding the taxes themselves. Did they really happen? When? What size will they have? And which places may be involved?
A number of apparel manufacturers, which have purposefully expanded their production over the past few years, may consider this last question. Consider Nike, for instance. Nike has steadily decreased its reliance on manufacturing in the second-most populous nation in the wake of centuries of ferocious criticism over the state of its supply chain. In fiscal 2016, factories in China manufactured 29 % of total Nike brand footwear and 26 % of its apparel, in fiscal 2024, it was 18 % of footwear and 16 % of apparel.
Additionally, one might not believe the supply chain of Under Armour to be as depend on China. In 2013, 46 % of the company’s business was sourced from China. By its investment time in 2018, that had been reduced to about 18 %, according to Colin Browne, then the bank’s key supply chain officer. Of that 18 %, only 10 % —a little more than half—was actually brought into the U. S. for domestic sales.
At the time, Browne said,” We’re positive that we’re going to keep that down for the next year.”
On the other end of the spectrum are companies like Steve Madden ( Nasdaq: SHOO ). U. S. exports account for about two-thirds of the company’s general company, and of that full, about 70 % of those products are sourced from China. In other words, only under half of Steve Madden’s present firm comes via China. In the coming year, the company plans to reduce that by 50 %, according to chairman and CEO Edward Rosenfeld earlier this month.
On Steve Madden’s earnings call on November 7th, Rosenfeld told analysts,” We have been planning for a possible scenario where we would have to move items out of China more quickly.” ” We’ve worked hard over a protracted period to build our stock bottom and our sourcing capability in other countries like Cambodia, Vietnam, Mexico, Brazil, etc. And so we are starting to implement that plan as of yesterday morning, and you should anticipate a decrease in the amount of products we can buy from China over time.
Trump’s taxes, however, was include goods from other countries. Mexico, a land immediately referenced by Rosenfeld, is also in his claimed intentions. Europe and Asia might adopt, too. Andrew Tilton, the main Asia-Pacific economist at Goldman Sachs, just cited trade imbalances with South Korea, Taiwan, and Vietnam, two of the country’s top importers.
After a few years of higher prices and inflation, added cost will occur for many businesses and consumers. Some people find the timing to be especially challenging, according to Smith.
” The one compromise that I’m hearing across the market is this”, Smith said. ” There’s always a good time to increase consumer costs, but from a sports and fitness point, where the state more than ever needs individuals participating in an active life, this is the absolute worst time to raise costs”.