Tariffs: what happened? In an unexpected move, the United States has changed its tariff policy, announcing a 90 day pause on higher tariffs and instead authorising a universal lowered reciprocal tariff of 10% on most countries, except China. Tariffs on goods from China have been increased to 125%, after Beijing said that it would raise tariffs on US imports to 84%. We update our European Sporting goods tariffs sensitivity analysis, last published here. BNPP Exane View: We show an updated theoretical illustrative summary of the potential impact of the updated tariffs using scenario analysis on both Adidas and Puma. It is important to note that several assumptions are built into the model, and so this does not represent a definitive answer. This time, we assume no tariff mitigation by the companies and, importantly, we assume the companies continue to source from China despite the elevated tariff rate. Our model is available upon request. . Sourcing mix: We create a blended tariff rate based on our estimates of the sourcing exposure by country into the US and calculate that COGS could go up c.2%. We tend to use the global sourcing mix as a proxy but note that China sourcing into the US is only around 3-4% for Adidas and around 10% for Puma. In the new, higher tariffs scenario, the companies could potentially move away from China sourcing completely. We note that companies like Adidas and Puma have already made significant strides in moving sourcing away from China but realise that this could take time. For our estimates on sourcing mix detail, refer to Liberation Day implications for European General Retail . Scenarios: We summarise the scenarios depending on US price hikes: 1) US pricing does not increase, 2) US price increases of 5%, 3) US price increases of 10%. . Top-line and COGS assumptions: In the pricing scenarios, we assume that units fall proportionally to the price increases (revenues unchanged), which is a key variable to...