The price of Adidas shoes for customers would not be impacted by the latest announcement by United States president Donald Trump of 10 per cent tariffs on $300 billion of Chinese goods imported into the country starting September 1, said the CEO of the company Kasper Rorsted.

However, since about 25 per cent the business of the company is base d in China, therefore the earnings of the company could be significantly impacted by the likelihood of the weakening of the Chinese currency, Rorsted said.

Strong sale revenue growth in China helped the company to report higher than expected quarterly earnings, and the company forecast greater rate of growth in the second half of the year. However the company had also warned that its business and the global economy would be affected by the currency war with China.

“I can say the U.S. consumer will not see any impact of the current plan of tariffs going into the U.S.,” he said in a television interview. “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,” he added.

The official reference rate for the Chinese currency was set at 7.0039 yuan per dollar by China’s central bank on Thursday.  That level is the lowest for the currency since April 2008. On Monday, the Chinese currency breached the conventionally held important 7 yaun per dollar mark which have forced investors to closely watch the movements of the currency. The uninterrupted drop of the currency on Monday had prompted the United States Treasury Department to label China as a currency manipulator.

Rorsted said that everyone would stand to lose if the United States gets into a currency was with China in addition to the ongoing trade war between the two largest economies of the world.

“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.”

Since most of the production of Adidas is in Vietnam, Indonesia and Cambodia, therefore the company is not as much exposed to the the U.S.- China trade war as some other rivals, Rorsted said.

“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.”

He said that here can be more impact on prices because of the trade war and the tit-for-tat tariffs in other companies that have manufacturing units in China. “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.

(Adapted from CNBC.com)

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