Trump's new tariffs will hit clothing and sneaker retailers: H&M, Nike and Adidas shares have already fallen
Kyiv • UNN
Due to Trump's new tariffs on clothing manufacturers in Vietnam and Indonesia, prices for Nike and Adidas may rise. Shares of Nike, Adidas and Puma fell sharply after the tariff announcement.
Prices for Nike Jordan and Adidas Samba sneakers are likely to rise in the United States after US President Donald Trump introduced a series of new duties for key sportswear and apparel manufacturers, including Vietnam and Indonesia, Reuters reports, writes UNN.
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Leading American brands such as Nike have spent years abandoning Chinese factories due to escalating political tensions between Washington and Beijing, but new tariffs now threaten supplies from Southeast Asia, from tracksuits to high-tech sneakers.
Shares of Nike, Adidas and Puma fell sharply after Vietnam was subjected to a tariff rate of 46%, Cambodia - 49%, Bangladesh - 37% and Indonesia - 32%, while Trump raised tariffs for China by an additional 34 percentage points after earlier tariffs in 2010.
"Companies that have worked hard for years to reduce their dependence on China by focusing on countries like Vietnam have simply realized that there is really nowhere to hide," said Simeon Siegel, an analyst at BMO Capital Markets.
Shares of fashion retailer H&M, which mainly sources products from China and Bangladesh, fell by 5%, while shares of American retail giant Amazon and Target fell by 8% and 10% respectively.
Bernstein analyst Anish Sherman said that brands like On Holding, whose $150 sneakers target wealthier buyers, could more easily raise prices without affecting revenue.
"For everyone else, I think a short-term mitigation strategy would be to try to revise contracts with suppliers and vendors, so you can share the pain up and down the value chain," she said.
The new tariffs will increase the average U.S. import tariff rate on clothing from 14.5% in 2024 to 30.6%, according to calculations by Sheng Lu, a professor of fashion and apparel studies at the University of Delaware.
Based on the value of imports in 2024, this would amount to up to $26 billion in tariffs on clothing, more than double last year's level, Lu said.
According to UBS analysts, retailers may not be able to fully offset this tariff, as countering the impact of tariffs on Vietnam alone would require price increases of 10-12%.
"With additional tariffs being proposed in other key Asian supply hubs, the scenario of relocating production now looks much less viable, narrowing the set of effective mitigation levers available to brands," UBS analysts added.
The International Apparel Federation, representing apparel manufacturers in 40 countries, called the tariffs a "serious shock".
"Eventually, someone will have to pay the price," the association said in a statement.
Nike produced half of its footwear and about 30% of its apparel in Vietnam in fiscal year 2024, while Adidas relied on the Asian country for 39% of its footwear and 18% of its apparel last year.
Nike shares fell about 10% to their lowest level since 2017 on Thursday, while Adidas fell 11% and Puma fell about 10%.
Sportswear manufacturers, including Lululemon, Skechers, Under Armour, Deckers and On, fell by 11-17%.
"Some companies could shift production locations for the U.S. market, but that usually takes years, not days," said Brian Jacobsen, chief economist at Annex Wealth Management. "Prices could rise, consumers could balk, costs will rise. It's not a very good picture for profits."