Adidas and Fast Retailing have joined the ranks of apparel magnates grappling with the reality of increased product costs in the United States due to new import tariffs levied on key Asian manufacturing nations.
The US has instigated reciprocal import duties of 20 per cent on Vietnam, 35 per cent on Bangladesh, 36 per cent on Cambodia, and 19 per cent on Indonesia and the Philippines. These tariffs target those countries that rule the roost in the worldwide apparel sourcing industry.
Adidas CEO, Bjorn Gulden, has indicated that these tariffs could hike the company’s product costs in the US by a staggering US$218 million for the remainder of the year. “The tariffs will directly increase the cost of our products for the US,” Gulden commented. He added that Vietnam is Adidas’ chief production hub for the American market. The company has already felt the sting of tariff-related losses amounting to “double-digit euro millions” in the second quarter.
Fast Retailing CFO, Takeshi Okazaki, confirmed that Uniqlo is set to raise prices to counteract escalating costs. “We will adjust prices flexibly, considering tariffs and other costs to strike a balance between price and value,” he stated. Fast Retailing oversees 74 Uniqlo stores in the US and sources extensively from Southeast Asia, including 60 factories in Vietnam, 27 in Bangladesh and 19 in Cambodia.
Other world-class corporations are also bracing for the cost surge. Nike, which manufactures half its footwear in Vietnam and 27 per cent in Indonesia, previously announced its anticipation of an additional $1 billion in tariff-related costs and has already initiated price increases. Gap had previously forecasted $250 million to $300 million in extra costs, and H&M has hinted at contemplating price adjustments.
According to the US International Trade Commission, apparel imports into the country amounted to $79.3 billion last year, equivalent to one-fifth of the global total. Vietnam was responsible for 18 per cent of the US market, followed by Bangladesh (9 per cent), India (6 per cent), and Indonesia (5 per cent).
What is the projected increase in Adidas’ product costs in the US due to the new tariffs?
Adidas CEO, Bjorn Gulden, estimates that the tariffs could increase the company’s US product costs by up to US$218 million for the rest of the year.
How is Fast Retailing planning to handle the rising costs due to tariffs?
Fast Retailing CFO, Takeshi Okazaki, has confirmed that Uniqlo will raise prices to offset the rising costs. He stated that the company will adjust prices flexibly, considering tariffs and other costs to strike a balance between price and value.
What is the value of apparel imports into the US according to the US International Trade Commission?
The US International Trade Commission reports that the value of apparel imports into the country last year was $79.3 billion, which is equal to one fifth of the global total.
