The Deal
The tariffs announced by US President Donald Trump have triggered what appears to be a new age for international trade. The sweeping tariffs on imported goods – a defining policy at the start of his second term – have sent shockwaves through businesses worldwide.
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No sector has been spared – not even sport.
It started with the US imposing a 25% tariff on steel and aluminum imports, a 20% tariff on certain goods from China and the European Union (EU), some levies on Canadian and Mexican products, and a wide array of smaller Asian economies with strong textile industries, such as Vietnam and Taiwan.
Overall, around 180 countries were hit with reciprocal tariffs, while around 60 countries were penalized with tariffs higher than the 10% base level – nations Trump has accused of “decades of trade abuse” against the US.
In response, Canada said it would place 25% tariffs on $20.1 billion of US products, including sports equipment, while the EU also announced retaliatory tariffs on American-made goods, including sports footwear, ski boots, and jerseys.
A tit-for-tat between the two powerhouse countries has also seen China announce an 84% tariff on US imports after Trump imposed a 104% tariff on Chinese goods entering the US.
The stock market’s reaction in the West and East has been swift, plunging both into a downward spiral and creating uncertainty across all sectors.
The latest move last night saw Trump step back from an all-out trade war and pause the higher tariff rates, with a few notable exceptions. A deepening trade war with China has emerged after the Trump administration slapped a 125% tariff on goods from China.
While the stock market has rebounded with the news, Trump is still imposing a 10% across-the-board tariff, and in 90 days, when the pause is lifted, the economic uncertainty could start again.
Why it matters
The tariffs could have far-reaching effects on professional sports. While the sports sector has previously been able to insulate itself from political fluctuations, this time, the tariffs' knock-on effect could be felt throughout the industry.
However, the number one feeling within the sector is uncertainty.
Conrad Wiacek, head of analysis at GlobalData Sport, commented: “The sport industry is in a 'wait and see' period when it comes to tariffs.
“There will be downstream impacts on the sponsorship industry as tariffs take hold – the impact on the automotive and technology sectors will be profound, which will impact on profits and therefore likely impact on marketing and sponsorship spend.
“Asian-based automotive and technology firms have significant exposure across the US in terms of sponsorship, and as tariffs bite, they may reassess the need to have a sponsorship presence in what is a hostile market.
“While this may not impact in the short term as we head into new seasons of MLS and NWSL [men's and women's soccer] and MLB [baseball], when the new NFL [American football], NBA [basketball] and NHL [ice hockey] seasons start later in the year we may have a clearer indication on how brands are going to react to tariffs.”
The details
The most direct hit to the industry is the blanket 25% tariff on steel and aluminum coming into the US which could drive up expenses for new stadium or renovation projects, with steel being the most expensive part of any stadium construction project.
The US imports roughly a quarter of its steel, with Canada and Mexico being two of the three biggest sources.
Those most at risk are those involved with stadium projects that are in the pre-construction phase in the US, including the Oklahoma City Thunder’s new basketball arena and the Athletics' stadium in Las Vegas.
Should these tariffs remain for a long period, it is possible that some infrastructure projects, especially those that are publicly funded, will be paused or canceled amid the spiraling costs.
Sporting goods, meanwhile, have a lot of production outside the US, with Nike and Adidas having huge footprints in China and Southeast Asia, making them vulnerable to the policies. Both have already seen their stocks tumble by 11% (Nike) and 9% (Adidas), with Nike estimating $12 billion in market losses.
Most sports teams and athletes are sponsored by sportswear brands, and their merchandise sales may suffer going forward.
The rise in the supply chain most likely will be passed on to consumers – jerseys, equipment, and official merchandise may all become more expensive depending on the financial burden sports clubs and manufacturers are willing to absorb.
Sports sponsorships by companies impacted by the tariffs will be the next to feel the ripple effects of the new policies.
Earlier this week, Audi, the German automotive brand with a range of major US soccer sponsorships in place, halted its exports of cars to the US, throwing into question how the company would activate its sponsorships given how prohibitive it is to sell its products in that market.
The US is also set to stage some of the world’s biggest sports events over the next few years, including this year’s FIFA Club World Cup (CWC), the 2026 FIFA World Cup, and the 2028 LA Olympic and Paralympic Games.
The events would usually provide overseas businesses with an opportunity to raise their profile in the US and boost their sales, with the automotive industry a big player within sports sponsorship. However, those brands, including Korea’s Hyundai Group – which has a deal with world soccer governing body FIFA – may rethink how they engage with these events.
Concerning the 2026 FIFA World Cup, Trump’s tariffs have hit their World Cup co-hosts and biggest trading partners, Canada and Mexico. Such is the animosity between the US and its neighbors that it has thrown into doubt how the trio will be able to come together to stage the world event.
The US also promoting the 2028 LA Olympics and Paralympics as a coming together for all nations amid a backdrop of hostility and bad blood will feel inauthentic, leading to sponsors possibly shying away from associating with the event.
Media rights deals seem safe at the moment, with partnerships already locked in for the time being and labeled a service rather than a product. However, should the policies drag on during negotiations for renewals, prices may be affected.
