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WEDNESDAY, JULY 23, 2025
Sneaker and apparel retailers blindsided by tariffs on Asian factory hubs

Economy

Reuters
03 April, 2025, 08:55 pm
Last modified: 03 April, 2025, 09:05 pm

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Sneaker and apparel retailers blindsided by tariffs on Asian factory hubs

“We are studying it. Since it is negotiable, we will negotiate and I am sure we can craft out the best deal,” the Chief Adviser’s Press Secretary Shafiqul Alam said quoting Prof Yunus as saying

Reuters
03 April, 2025, 08:55 pm
Last modified: 03 April, 2025, 09:05 pm
Adidas sneakers are displayed for sale at the Galeries Lafayette department store on the Champs-Elysees avenue in Paris, France, April 11, 2019. REUTERS/Benoit Tessier/File photo
Adidas sneakers are displayed for sale at the Galeries Lafayette department store on the Champs-Elysees avenue in Paris, France, April 11, 2019. REUTERS/Benoit Tessier/File photo

Prices of Nike Jordan and Adidas Samba sneakers are likely to rise in the United States after President Donald Trump imposed a raft of new tariffs on key manufacturers of sportswear and apparel, including Vietnam and Indonesia.

Top US brands like Nike have spent years shifting away from Chinese factories as political tensions between Washington and Beijing escalated, but the new tariffs now threaten Southeast Asian supplies of everything from tracksuits to high-tech running shoes.

Shares in Nike, Adidas and Puma dropped sharply after Vietnam was targeted with a 46% tariff rate, Cambodia with 49%, Bangladesh with 37% and Indonesia with 32%, while Trump hiked tariffs on China by an extra 34 percentage points, following the earlier 20% tariffs.

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"Companies that worked hard over the years to reduce reliance on China by leaning into countries like Vietnam just learned there really isn't a place to hide," BMO Capital Markets analyst Simeon Siegel said.

Shares in fast-fashion retailer H&M, which sources mainly from China and Bangladesh, fell 5%.

Bernstein analyst Aneesha Sherman said brands like On Holding, whose $150 sneakers target wealthier shoppers, might more easily push prices up without impacting revenues.

"For everybody else, I think the mitigation strategy short term will be to try to renegotiate supplier and vendor contracts, so kind of share the pain up and down the value chain," she said.

The new tariffs would increase the average US import tariff rate on apparel from 14.5% in 2024 to 30.6%, according to calculations by Sheng Lu, professor of fashion and apparel studies at the University of Delaware.

Based on 2024 import values, this would result in $26 billion in duties on apparel, more than double last year's level, Lu said.

Retailers may not be able to fully offset these tariffs, as countering the impact of the levies on Vietnam alone would require price increases of 10% to 12%, according to UBS analysts.

"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," the UBS analysts added.

The International Apparel Federation, which represents garment manufacturers in 40 countries, called the tariffs a "major shock."

"Ultimately, someone will have to pay the price," the association said in a statement.

Nike produced half its footwear and roughly 30% of its apparel in Vietnam in its 2024 financial year, while Adidas relied on the Asian nation for 39% of its footwear and 18% of its apparel last year.

Shares of Nike tumbled about 13% in early trading on Thursday, while Adidas was down 10% and Puma fell 12%. Nike shares hit their lowest level since 2017.

Rival sportswear makers, including Lululemon, Skechers, Under Armour, Deckers and On were down between 10% and 17%.

Nike and Adidas did not reply to requests for comment on the tariffs, while On said it was "constantly monitoring the evolving situation." Puma said it is evaluating the situation and "will react swiftly."

"Some companies might be able to change where they produce for the US market, but that usually takes years, not days," said Brian Jacobsen, chief economist at Annex Wealth Management. "Prices may rise, consumers might balk, costs will increase. It's not a pretty picture for profit margins."

Bangladesh / Top News

Sneakers / Trump Tariffs

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