By
Reuters
Revealed
April 1, 2025
Nike may quickly face one other blow in its effort to revive its model and reverse a protracted decline in gross sales: U.S. tariffs on imports from Vietnam.
Reuters
On Wednesday, U.S. President Donald Trump is anticipated to announce which nations and merchandise he’ll goal with a brand new spherical of tariffs geared toward encouraging home manufacturing and coaxing different nations to purchase extra U.S. items.
Vietnam, which runs a $123.5 billion commerce surplus with the US, is a primary goal.
Nike is one in every of a number of sportswear manufacturers closely reliant on Vietnam as a manufacturing web site and better tariffs would power the corporate to soak up greater prices or hike its costs at a time when it’s already discounting some objects to clear stock.
Nike produced 50% of its footwear and 28% of its attire in Vietnam in its 2024 monetary yr, in accordance with its annual report. Rival Adidas, opens new tab is barely much less uncovered, counting on Vietnam for 39% of its footwear and 18% of its attire.
The common U.S. tariff charge on footwear from Vietnam is 13.6%, whereas the speed on attire is eighteen.8%, in accordance with calculations, opens new tab based mostly on January commerce information made by Sheng Lu, professor of trend and attire research on the College of Delaware.
“If tariffs are extended there, then Nike’s got a problem,” mentioned Morningstar analyst David Swartz.Nike and Adidas are hardly alone. Vietnam has grow to be a hub for high-tech trainers, sportswear, and out of doors attire as manufacturers have sought to scale back publicity to China, opens new tab.Lululemon, opens new tab, Columbia Sportswear, and Amer Sports activities, opens new tab, which owns Salomon and Arc’Teryx, rely Vietnam as their high manufacturing nation.
However the potential tariffs come at a essential second for Nike, which has misplaced market share of late to opponents seen as brisker and extra progressive, like On and Hoka.
In a quarterly earnings name final month, Chief Monetary Officer Matt Pal mentioned Nike’s income was anticipated to proceed to fall subsequent quarter.
That outlook factored in present tariffs, mentioned Mari Shor, senior equities analyst with Columbia Threadneedle Investments, which holds Nike shares. “But what if it gets worse?”
Some smaller, youthful sportswear manufacturers are much more uncovered to Vietnam. Quick-growing working model On in 2024 sourced 90% of its footwear and 60% of its attire and equipment from the nation.
On footwear are already costly, promoting for $130 to $330 a pair, and Samuel Wenger, the model’s chief working officer, mentioned tariffs have been among the many components On considers when deciding on value. “Our premium brand gives us the ability to adapt our pricing thoughtfully,” he instructed Reuters.
Common U.S. costs of sneakers have already risen by 25% since 2019, partly due to rising manufacturing prices, mentioned Beth Goldstein, footwear business analyst at market analysis agency Circana.
Wilbur Ross, who served as commerce secretary in Trump’s first administration, mentioned the president had typically good ties with Vietnam and had no purpose to hit it arduous with tariffs that will be felt on most important road.
“People notice the cost of apparel because they buy it fairly frequently,” Ross instructed Reuters.
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