Brooks Running to Maintain Southeast Asia Production Despite Trump Tariffs

Brooks Running Company, a subsidiary of Berkshire Hathaway, has announced its commitment to maintaining production in Southeast Asia despite the implementation of tariffs proposed by Donald Trump. The tariffs are expected to increase the cost for consumers purchasing the company's high-performance running shoes.

Dan Sheridan, the CEO of Brooks Running Company, who has been with the company for 27 years and took over the role in April 2024, emphasized during the Berkshire Hathaway annual shareholder meeting that the company's production facilities in Vietnam and Indonesia are at risk of facing higher tariffs. Sheridan noted that the company is currently operating under the assumption that Trump's proposed 10% across-the-board import tariff will remain in effect.

However, the outlook becomes less clear if Trump follows through on his threat to impose 46% and 32% tariffs on imports from Vietnam and Indonesia, respectively. Brooks produces 85% of its shoes in Vietnam, with the remaining 15% manufactured in Indonesia. Sheridan stated, "We anticipated the tariffs post the presidential election. However, we remain committed to producing in these countries. The high-performance running shoes produced in Southeast Asia are the best, and we have reliable partners with whom we have collaborated for over 20 years."

The company reported a 9% increase in revenue, exceeding $1.3 billion, for the previous year, with projections for this year's revenue to reach $1.5 billion. Although 80% of the revenue comes from North America, China is a rapidly growing market. In China, nearly 70% of the company's sales come from the $200 Glycero Max series, the company's second most expensive shoe model.

U.S. consumers will soon feel the impact of even a 10% tariff. Sheridan announced that the company has informed retailers that the price of its best-selling "Ghost" series running shoes will increase by $10 to $150 this fall. He believes this price is appropriate for the shoe and will not affect demand. However, a 46% tariff would be a different story. Sheridan said, "Like most people and business leaders, we were a bit shocked. We have been studying various scenarios of tariff increases, but we did not anticipate tariffs reaching 46% or 32%. The market cannot sustain a 46% price increase."

Last week, Brooks was one of 76 shoe brands that signed a joint letter to the White House requesting an exemption from retaliatory tariffs, stating that they pose an "existential threat" to the U.S. footwear industry. Other well-known brands such as Nike, Adidas, and Skechers also signed the letter, along with another Berkshire-owned footwear company, Justin Brands.

Sheridan noted that past periods of economic uncertainty have shown that people continue to run. He said, "This is a category that is relatively recession-resistant. There is a lot of uncertainty in the supply chain, but we believe the uncertainty affecting people's willingness to participate in running is relatively small."

Brooks is also focusing on expanding its brand. Following partnerships with Disney and the Seattle Kraken hockey team in 2024, the company may add more collaborations. While Brooks does not chase fashion trends, its Max series running shoes feature a large midsole design, which is more common in competitors' shoes from brands like Hoka and Asics. Sheridan emphasized that such shoes should provide biomechanical benefits to runners, not just look good or stand out.