KEY TAKEAWAYS
- Nike shares are tumbling 11% in intraday trading Thursday after President Donald Trump imposed steep reciprocal tariffs on Vietnam and other Asian countries where the sneaker giant makes most of its products.
- The U.S. imposed a 46% tariff on imports from Vietnam, which manufactured about half of Nike’s footwear in fiscal 2024.
- Morgan Stanley recently wrote that investors are underappreciating the potential impact of tariffs on Vietnam.
Nike (NKE) shares are tumbling 11% in intraday trading Thursday after President Donald Trump imposed steep reciprocal tariffs on Vietnam and other Asian countries where the sneaker giant makes most of its products.
The U.S. imposed a 46% tariff on Vietnamese goods, 32% on Indonesia, and 49% on Cambodia. President Trump also announced 34% levies on imports from China in addition to previously imposed 20% tariffs on goods from Asia’s largest economy.
According to its fiscal 2024 annual report, factories in Vietnam, Indonesia, and China manufactured approximately 50%, 27%, and 18% of its footwear, respectively, while factories in Vietnam, China, and Cambodia made 28%, 16%, and 15% of apparel.
“Potential incremental Vietnam tariffs appear under-appreciated by investors, & could prove a notable headwind given significant sourcing exposure across our coverage,” Morgan Stanley analyst Alex Straton recently wrote, noting that apart from Nike, sneaker companies Allbirds (BIRD), Skechers (SKX) and On Holding (ONON) are “potentially most exposed” from levies imposed on the Southeast Asian country.
Shares of On Holding, Skechers, and Allbirds are tumbling 18%, 11%, and 8%, respectively, in premarket trading.
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