Trump's tariffs spark market turmoil for sports giants
Shares of companies like Nike, Adidas, and Puma plummeted after U.S. President Donald Trump announced new tariffs. The decision hits particularly hard in Vietnam, where American company Nike employs over 450,000 workers in 130 factories. The country faces a 46% tariff rate.
On Wednesday evening, the President of the United States imposed a series of new tariffs on goods imported from various countries. Among these are key production centers for sports companies. Vietnam was subjected to a 46% tariff rate, Cambodia 49%, Bangladesh 37%, and Indonesia 32%. Additionally, Trump increased tariffs on China by an additional 34 percentage points, adding to the previously imposed 20%.
According to UBS analysts, companies, including American ones, might not be able to fully compensate for the effects of tariffs. Balancing the impact of the tariffs imposed on Vietnam alone would require price increases of 10-12%.
Manufacturers abandoned China. They'll pay tariffs
In recent years, footwear manufacturers and retailers have diversified their supply chains away from China due to increasing political tensions between Washington and Beijing. They have imported more from countries like Vietnam, Thailand, and India, reports Reuters.
UBS analysts add, "With additional tariffs proposed across other key Asian sourcing hubs, the scenario of shifting production now looks far less viable, narrowing the set of effective mitigation levers available to brands." According to a Jefferies report, the United States imported textiles and clothing from Vietnam valued at over 15 billion dollars in 2024, accounting for about 10% of Vietnam's total exports to the USA.
Significant decline in sports apparel manufacturers' stock values
Investors are viewing this data with concern, as evidenced by the performance of sports giants. Nike produced half of its footwear and about 30% of its apparel in Vietnam during the 2024 fiscal year, while Adidas relied on this Asian country for 39% of its footwear and 18% of its apparel last year. Nike shares fell by about 8% in pre-market trading, while Adidas shares dropped 9% to their lowest level in nearly a year. Puma shares fell by 8.5%, reaching their lowest level since November 2016.
Indonesia and Cambodia are also key production centers for Adidas, producing 32% and 23% of its footwear and apparel respectively in 2024. Competing sports apparel manufacturers, including Lululemon, Skechers, Under Armour, Hoka (Deckers' producer), and On Holding, also saw declines between 8% and 15% before the stock market opened on Thursday.
"Nike, Adidas and Puma did not reply to requests for comment on the tariffs, while On said it was 'constantly monitoring the evolving situation'," reports Reuters.
Retail companies relying on Asian factories also suffered. Shares of American giants Walmart and Amazon fell by about 6% and 5% respectively, while shares of Swedish company H&M, which sources products mainly from China and Bangladesh, dropped by 4.5%, and Zara's owner, Inditex, by 3%.
