President Donald Trump’s decision to levy a 10% tariff on another $300 billion of imports from China will not impact Adidas shoe prices for consumers, the company’s CEO Kasper Rorsted said.
“I can say the U.S. consumer will not see any impact of the current plan of tariffs going into the U.S.,” he told CNBC’s Sara Eisen Thursday in an interview that ran on “Squawk on the Street.” “So we’re happy to say we continue to buy our products at the right price in the U.S. even after the second set of tariffs coming on the Chinese products.”
China’s central bank on Thursday set the official reference rate for the Chinese currency at 7.0039 yuan per dollar, which is the weakest rate since April 2008. Investors are watching the currency after it breached the 7-yuan-per-dollar level Monday, which prompted the U.S. Treasury department to call Beijing a currency manipulator.
Rorsted said the prospect of China weakening its currency could have a “significant impact” on the firm’s earnings, since 25% of its business is based in China. Entering into a currency war with China would be a losing game for everyone, he said.
“It’s been more or less stable for the last three months, but that is one where we believe nobody can win,” Rorsted said.
“There’s not a lot of mitigation we can do, so we hope that a certain amount of normality will come in and the Chinese RMB [Chinese yuan] will become stable in the quarters to come.”
Adidas reported Thursday higher quarterly earnings on strong sales in China, and predicted more growth in the second half, but said that the currency war with China would hurt business and the world economy.
Rorsted said the firm is less exposed to the U.S.-China trade war since most of the production is in Vietnam, Indonesia and Cambodia.
“We changed our manufacturing landscape in the last four years before this trade war even started simply to diversify, so most of the stuff we manufacture in China is for China,” he said. “So that’s why we’re less exposed to this.”
Other companies that are manufacturing in China could see more of an impact on prices, he said.
“However, of course, the normal U.S. consumer that buys normal shoes in whichever store in the U.S. will be impacted because a lot of shoes are still being manufactured in China,” he added.