Will your next Nike and Adidas cost more? Here is how Donald Trump’s reciprocity tariffs affect your shopping bill
Trump’s tariffs: The latest reciprocity tariffs imposed by U.S. President Donald Trump on major trading partners could impact the supply chain of the world’s largest footwear and apparel brands, especially with 46% of the responsibilities of these brands’ major production hubs.
Over the past decade, Nike and Adidas, the global brands in the sportswear and sportswear industry, have produced most of the goods in Vietnam. Currently, nearly half of Nike’s shoes are made in Vietnam, according to its 2024 annual report. Meanwhile, Adidas accounts for 27% of its products from Vietnam.
Vietnam is the largest footwear supplier for Nike and Adidas, contributing more than $20 billion in annual revenue. Bloomberg.
The impact of mutual tariffs on footwear brands
The reciprocal tariffs imposed by the United States on the United States are expected to affect major footwear brands. Nike expects gross margins to fall this quarter due to U.S. tariffs on China and Mexico.
The report quotes Bloomberg intelligence analyst Poonam Goyal, “Given that performance footwear does not need to transfer supply chains, this is not an option.” She added: “I don’t see that prices for consumers are not going to rise.”
What is a reciprocal tariff?
By definition, a reciprocal tariff is a tax or trade restriction, where one country places it in another country in response to similar actions taken by the country.
On April 2, U.S. President Donald Trump announced reciprocal tariffs on trading partners. Trump has put forward at least 10% tariffs on almost all goods entering the United States. As for Vietnam, Trump announced a mutual tariff rate of 46%.
The existence of clothing brands in Vietnam
Apart from Nike and Adidas, Vietnam remains the largest supplier of other major apparel companies, such as Fast Retail Co, Hennes & Mauritz AB (H&M) and Gap Inc., the parent company of Uniqlo.
During Donald Trump’s first term as U.S. president, Vietnam’s footwear and textile industries had a significant boost as the escalating trade war with China.
Why choose Vietnam?
Vietnam has become one of the production centers of top brands. It is reportedly cheaper to labor and skilled labor. Transport routes to Vietnam are also considered not prone to geopolitical problems. In addition, the country has reached a trade agreement with the United States and the European Union.
Trump and Vietnam issues
In 2019, Trump claimed that Vietnam used the United States, which is “worse than China”, to show potential action against the country.
With the trade war between the United States and China in Trump’s first semester, footwear and clothing have become Vietnam’s highest exports. Currently, Nike and Adidas have less than 20% of footwear in China.
Vietnam is one of the fastest growing economies in Asia. Its GDP was 7.1% last year, higher than analysts’ estimates Bloomberg.
