How sporting goods brands navigated 2025’s tariff challenge

The contradiction captures 2025’s economic paradox: despite Trump’s “Liberation Day” tariffs launched in April, global trade flows reached new highs, driven largely by tech and AI demand. But for sporting goods companies heavily reliant on Asian manufacturing, the year became a chronicle of disruption, stock market volatility and painful strategic pivots.

April’s Liberation Day sent shockwaves through sporting goods

When Trump unleashed his sweeping tariffs in April 2025, sporting goods stocks suffered immediate, severe losses. Nike fell 14 percent in a single trading day, On Holding surrendered 16 percent, and Under Armour plunged 20 percent. Amer Sports, parent company of Wilson and Louisville Slugger, dropped 13 percent.

The damage reflected a harsh reality: the sporting goods industry had spent years diversifying away from China during Trump’s first term, only to find itself dangerously exposed when the new tariffs expanded to other Asian manufacturing hubs where production had shifted. 

Vietnam, which had emerged as the industry’s primary production hub, faced a punishing 46 percent tariff – up from the previous 14 to 18 percent range. Cambodia was hit with 49 percent, Indonesia 32 percent, and China remained at 54 percent minimum. Even India, seen by some as an alternative, faced 50 percent tariffs on leather exports. 

For an industry where Vietnam accounts for 20 percent of global sports goods exports according to World Trade Organization (WTO) data, the impact was existential. Nike manufactures nearly half of its footwear and 28 percent of its brand apparel in Vietnam. On Holding produces 90 percent of its footwear and 60 percent of its apparel there. Lululemon makes 40 percent of its sportswear in Vietnam, with another 17 percent coming from Cambodia.

“There is no way to impose a tariff without hurting the United States. No way,” Matt Tomic, managing director at advisory firm MUFG, told Sportico in January as the tariff threat loomed.

Summer brought price increases and squeezed margins

By summer 2025, companies could no longer absorb the costs. Nike announced in May that footwear priced between $100 and $150 (€85-€128) would increase by $5 (€4.25), while items over $150 (€128) would jump by approximately $10 (€8.50). German sportswear brands Adidas and Puma were expected to follow suit.

Deckers, owner of Hoka, warned investors that tariff costs could total approximately $150 million (€128m) for the fiscal year, with only about half offset through price increases and cost-sharing with manufacturers. “For the back half, we are anticipating a more cautious consumer as the full impact of tariffs and price increases will be felt here in the US,” CEO Stefano Caroti said on an October earnings call.

Lululemon blamed a decline in fiscal second-quarter gross profit largely on “higher markdowns and tariff impact” in September. CFO Meghan Frank warned that tariffs would have an even bigger impact in the following quarter, with the company’s gross margin guidance decreasing “driven predominantly by increased tariffs including the removal of the de minimis exemption.”

The de minimis exemption, which had allowed packages valued under $800 (€680) to enter duty-free, was repealed by executive order on July 30. The change hit hard, forcing companies to pay duties on every single shipment regardless of value – including small orders of specialty fabrics, trims and samples crucial for product development.

The Footwear Distributors and Retailers of America calculated that a pair of Chinese-made children’s shoes costing $26 (€22) would likely carry a $41 (€35) price tag by back-to-school season – a 58 percent increase. Analysts projected leather goods prices could climb another 22 percent over the following two years as tariffs, global bottlenecks and a shrinking US cattle herd rippled through supply chains.

Fall revealed the scramble to restructure supply chains

By autumn, the extent of the industry’s supply chain challenge became clear. An analysis of 11 major sporting goods companies – including Fanatics, Under Armour, Adidas, New Balance, Nike, Puma, Lululemon, Amer Sports, Asics and Dick’s Sporting Goods – revealed they utilized 2,508 factories worldwide. China still hosted 35 percent of these facilities, Vietnam 18 percent, Indonesia 6 percent, Cambodia 4 percent and Taiwan 3 percent. In total, more than 80 percent of factories were located in East or South Asia, where Trump’s tariff rates were highest.

Under Armour had already reduced its China sourcing from 46 percent seven to eight years ago to approximately 17 percent. But the company now sourced 63 percent of its apparel and accessories from Jordan, Vietnam, Cambodia and Indonesia – all subject to high tariffs. In December, Under Armour’s Asia-Pacific managing director Jason Archer emphasized that China remained “a must-win market,” highlighting the double bind: tariffs on imports hurt, but a trade war risked Chinese consumers favoring domestic brands over international ones.

Steve Madden announced in November it aimed to slash its imports from China by up to 45 percent. Sporting goods retailer Academy Sports & Outdoors reduced its percentage of goods sourced from China to position itself for the years ahead. Industry data showed companies pivoting rapidly toward India and Indonesia to hedge exposure, though the transition proved neither quick nor painless.

“We saw all our channels to make boots keep getting more expensive until we were able to figure out a good solution,” Prasad Reddy, CEO of bootmaker Twisted X, told CNBC. His company had turned a conference room at its Decatur, Texas, headquarters into a “tariff war room” as import costs surged, shipments paused mid-transit, and invoices fluctuated wildly.

By late November, as third-quarter earnings reports arrived, the full impact remained uncertain. “Tariff impact is expected to increase over the next couple quarters for some of the footwear names as the percentage of inventory subject to higher rates grows,” Bernstein analyst Jed Hodulik explained. The lag existed because companies had front-loaded inventory earlier in the year and were only beginning to work through stock purchased under the new tariff regime.

Global trade patterns defy predictions

While sporting goods companies struggled, the broader trade picture defied Trump’s tariff logic. Despite predictions of “doom and gloom,” 2025 marked the first time global trade flows surpassed $35 trillion (€29.8 trillion), with 7 percent growth according to UN Trade and Development (UNCTAD) data. For goods specifically – which the Trump administration targeted rather than services – growth reached 6 percent, triple that of 2024.

China, despite the trade war with the US, reported a record $1 trillion (€850bn) trade surplus in the first 11 months of 2025 – the first time any nation reached that figure in a year. While China’s shipments to the US plummeted by 18.9 percent between January and November, exports to the European Union rose 8.2 percent, sales to ASEAN jumped 13.7 percent, and exports to Africa surged 26.3 percent.

Taiwan rode the AI boom to record export growth, leading the island to revise its 2025 economic growth forecast sharply upward to 7.37 percent – a 15-year high. South Korea was expected to exceed $700 billion (€595bn) in annual exports for the first time, largely due to semiconductor strength. Malaysia’s total trade was on track to hit RM3 trillion ($951 billion/€808bn) for the first time. Singapore’s non-oil domestic exports rose 11.6 percent year-on-year in November, marking the second consecutive month of double-digit growth.

The global trade surge was driven overwhelmingly by technology and AI-related products, particularly semiconductors. This created a stark division: tech companies thrived while labor-intensive industries like sporting goods and apparel absorbed mounting costs.

Looking ahead to 2026: uncertainty remains

As 2025 drew to a close, sporting goods executives faced 2026 with cautious trepidation. UNCTAD warned that “global trade growth is expected to be more muted as slowing global economic growth, geopolitical fragmentation, continued policy uncertainty and heightened vulnerability weigh on trade activity.” The agency noted that front-loading – especially of tech-related products due to uncertainty over American trade policy – had spurred much of 2025’s surge. With that temporary boost fading and momentum already slowing in the fourth quarter, the outlook darkened.

For sporting goods specifically, several factors compounded the challenge. Consumer spending on discretionary categories faced pressure as tariff-driven price increases hit household budgets. Industry analysts estimated the tariffs effectively functioned as a $625 to $2,400 (€531-€2,040) yearly tax on American households depending on which proposals were fully implemented.

Lower- and middle-income consumers, most sensitive to price increases, were expected to pull back while wealthier consumers continued spending. “The apparel industry can’t raise prices without risking a hit to demand,” Morningstar analyst David Swartz noted.

The geopolitical environment added another layer of uncertainty. Beyond the US trade war, China and Europe had been trading anti-dumping duties on various goods since summer, including electric vehicles and pork. French President Emmanuel Macron threatened further measures if Beijing failed to reduce its trade surplus with the EU, which exceeded $350 billion (€298bn) in 2024.

“The economic support from external demand will decline. It can’t be as high as it was this year or last year. This is why domestic demand has become so important,” said Tommy Xie, OCBC Bank’s head of Asia macro research, discussing China’s unprecedented trillion-dollar surplus.

Survival strategies emerge

Companies that navigated 2025’s turbulence best shared several characteristics: supply chain flexibility, strong direct-to-consumer channels, premium brand positioning and the financial resources to absorb short-term margin pressure.

Dick’s Sporting Goods, for example, reported relatively better performance thanks in part to reduced exposure to China and the ability to leverage its omnichannel capabilities. Lululemon, despite margin pressure, maintained 12 percent growth in the third quarter by prioritizing its direct-to-consumer strategy, with digital platforms accounting for a major share of revenue. Off-price retailers like Burlington, Ross Stores and TJX Companies (which operates T.J. Maxx and Marshalls) proved more resilient, as their business models offered some protection from tariff impacts. Companies with limited negotiating power, limited pricing power and high product exposure in Asia faced the toughest road.

The year also revealed that diversification alone wasn’t enough – speed and execution mattered. Companies that had already begun supply chain shifts years earlier, invested in automation and digitalization, and maintained strong relationships with manufacturing partners across multiple countries proved most capable of adapting quickly.

As the industry moved toward 2026, the fundamental question remained: could sporting goods companies restructure their supply chains, protect margins and maintain pricing power in a market where consumers already faced broader inflationary pressures? The answer would likely separate winners from losers over the coming years, with 2025 serving as the year that forced a reckoning the industry could no longer avoid.