• The US has imposed significant tariffs on imports from Vietnam, impacting major sportswear brands.
• Nike, Adidas, and Puma saw their share prices drop sharply amidst these tariff announcements.
• Vietnam is currently in negotiations to reduce these tariffs, potentially easing the economic impact.

Recent developments signal a challenging time for major sportswear brands as the US tariffs on imports from Vietnam and several Asian countries threaten to raise product prices significantly. On April 3, President Trump announced new tariffs targeting Vietnam with a staggering 46% duty, pivotal for brands such as Nike, Adidas, and Puma, which heavily rely on Asian manufacturing.Source: Reuters

Nike sources 50% of its footwear and over 28% of its apparel from Vietnam, making it vulnerable to these tariff hikes. Following the announcement, shares in Nike fell approximately 14% while Adidas and Puma experienced similar declines of up to 9% and 8.5% respectively. According to UBS analysts, such tariff structures may compel these brands to increase retail prices by 10% to 12%, a challenge when trying to maintain sales momentum amid declining consumer confidence.Source: Business Insider

With Vietnam being a cornerstone for manufacturing in the sportswear sector, the ramifications of these tariffs are extensive. The US imported over $15 billion worth of textiles and garments from Vietnam in 2024, which is about 10% of the country's total exports to the US.Source: SCMP

Amidst these concerns, Vietnam’s officials are reportedly in negotiations with the Trump administration to delay the application of these tariffs for up to three months, aiming for a better trade situation.Source: The Jakarta Post

Experts predict that unless they can mitigate rising costs, these tariffs will not only strain the manufacturers in Vietnam but could also lead American consumers to face noticeable price hikes on their favorite sports gear. “With high tariffs in play, it seldom favors nations like Vietnam, China, or Cambodia, yet local production costs in America make it unaffordable to manufacture everything domestically,” said Vera Yuen Wing-han, an economics lecturer at the University of Hong Kong.

The situation remains fluid as negotiations unfold; however, if tariffs prevail, we may see a shift in consumer behavior toward less expensive products amid rising costs.