Amer Sports CFO Andrew Page didn’t mince words on Tuesday when discussing the effect that looming tariffs might have on his business.
“We have some degree of flexibility to adjust our supply chain,” Page said on the company’s earnings call, “but price increases will be the primary tool we utilize should tariffs occur.”
It’s a conversation happening across the U.S. business world. President-elect Donald Trump has promised to impose hefty tariffs on some foreign imports, most notably a proposed 60% tax on those from China. For companies like Amer (NYSE: AS) that manufacture sportswear and hardgoods in China that are then sold in the U.S., it has created open questions over how to pay those tariffs, and whether to make rapid changes to existing supply chains.
“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 not a magic answer; there’s no magic solution.”
Amer’s stance—that any additional costs will be passed along to the consumer—is exactly what the SFIA fears most. When prices go up, according to Smith, fewer people in the U.S. have access to sports equipment, apparel and infrastructure. The health of Americans, he said, is the “hidden cost to tariffs.”
“Whatever positives one might think can come from tariffs—jobs being relocated, or manufacturing coming back onshore—those benefits are going to be far superseded by the negative impact that we’re going to take on from healthcare costs, both physical and mental, as fewer people are able to access sports and fitness,” Smith said. “That’s going to cost us a ton more money and create a ton more havoc than any benefit we might receive from tariffs.”
To illustrate the danger, Smith provided two statistics. In 2017, it cost $115 to buy everything needed for one child to play soccer. That’s a ball, uniform, shin guards and cleats. Six years later, the cost has risen 46% to $168.
Additionally, household income has a major impact on youth participation. Only 25% of children living in households earning less than $25,000 participate in sports, whereas that number jumps to 40% for children in households with income of more than $100,000. Money is “the biggest driver of early participation,” according to the Aspen Institute’s Project Play.
Amer certainly won’t be the only ones increasing prices if tariffs hit. On Holding co-CEO and CFO Martin Hoffmann alluded to something similar when the sneaker-maker (NYSE: ONON) reported earnings earlier this month, though he was far less direct than Page. Nike (NYSE: NKE) executives will almost certainly discuss their plans when they release earnings next month.
That said, there’s also a lot of uncertainty surrounding the tariffs themselves. Will they actually happen? When? How large will they be? And which countries will be involved?
That last question will be critical for a number of sportswear companies that have intentionally diversified their manufacturing over the past few decades. Take Nike, for example. Following decades of intense criticism over the conditions in its supply chain, Nike has gradually lowered its reliance on manufacturing in the world’s second most populous country. 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.
Under Armour’s supply chain is also less reliant on China than one might expect. In 2013, 46% of the company’s business was sourced from China. By its investor day in 2018, that had been reduced to roughly 18%, according to Colin Browne, then the company’s chief supply chain officer. Of that 18%, only 10%—a little more than half—was actually brought into the U.S. for domestic sales.
“We’re optimistic that we’re going to continue to drive that down for next year,” Browne said at the time.
On the other end of the spectrum are companies like Steve Madden (Nasdaq: SHOO). U.S. imports account for about two-thirds of the company’s overall business, and of that total, about 70% of those goods are sourced from China. In other words, just under half of Steve Madden’s current business comes via China. Chairman and CEO Edward Rosenfeld said earlier this month that the company plans to cut that in half in the next 12 months.
“We have been planning for a potential scenario in which we would have to move goods out of China more quickly,” Rosenfeld told analysts on Steve Madden’s Nov. 7 earnings call. “We’ve worked hard over a multiyear period to develop our factory base and our sourcing capability in alternative countries like Cambodia, Vietnam, Mexico, Brazil, etc. And so as of yesterday morning, we are putting that plan into motion and you should expect to see the percentage of goods that we source from China to begin to come down more rapidly going forward.”
Trump’s tariffs, however, could include goods from other countries. Mexico, a country directly referenced by Rosenfeld, is also in his stated plans. Others in Europe and Asia could follow. Goldman Sachs’ chief Asia-Pacific economist Andrew Tilton recently wrote a note highlighting trade deficits with other Asian importers, including South Korea, Taiwan and Vietnam.
For many companies—and consumers—added cost from tariffs will come immediately after a few years where inflation also kept prices high. It makes the timing particularly difficult for many, Smith said.
“The one consensus that I’m hearing across the industry is this,” Smith said. “There’s never a good time to raise consumer prices, but from a sports and fitness standpoint, where the country more than ever needs people participating in an active lifestyle, this is the absolute worst time to raise prices.”
