President Donald Trump is expected to announce new tariffs this week, targeting countries with large trade surpluses with the U.S. Vietnam, which holds a $123.5 billion surplus, is a prime candidate. For Nike—which manufactures 50% of its footwear and 28% of its apparel in Vietnam—this could mean higher costs or price hikes at a time when the company is already struggling with sluggish demand.
A Broader Industry Risk
Nike isn’t alone. Rival Adidas produces 39% of its footwear and 18% of its apparel in Vietnam, while brands like Lululemon, Columbia Sportswear, and Amer Sports (owner of Salomon and Arc’Teryx) also heavily rely on Vietnamese factories. Fast-growing running brand On sources 90% of its shoes and 60% of its apparel from the country.
The average U.S. tariff on Vietnamese footwear is 13.6%, while apparel faces an 18.8% duty. Any increase could squeeze profit margins or force brands to raise prices—a risky move as U.S. consumer confidence hits a four-year low.
Nike’s Struggles Worsen
The timing couldn’t be worse for Nike, which has been losing market share to newer, trendier rivals like On and Hoka. Last month, CFO Matt Friend warned that revenue is expected to decline further next quarter. While current tariffs were factored into forecasts, additional duties could deepen the slump.
Limited Alternatives
Relocating production is easier said than done. Other Southeast Asian nations like Cambodia and Indonesia face potential tariffs of their own, and rising demand has pushed up manufacturing costs there. Factories in Cambodia are already charging 5-10% more due to shifting supply chains.
A Possible Reprieve?
Experts suggest Vietnam may avoid the steepest tariffs, thanks to diplomatic efforts. The country has pledged to buy more U.S. goods, cut duties, and even allowed Elon Musk’s Starlink to operate there. Additionally, Trump’s business ties to Vietnam—including potential real estate and golf course ventures—could soften the blow.
“Vietnam has proven its ability to play the geopolitical game very skillfully,” said T. Rowe Price portfolio manager Johannes Loefstrand.
Former Commerce Secretary Wilbur Ross echoed that sentiment, noting Trump’s generally positive relationship with Hanoi. Still, with apparel prices already up 25% since 2019, further increases could test consumer patience—and Nike’s resilience.