Investing 18 running shoes on the Nike store in New York has thick feet, a $ 150 mark and tongue labels woven with the “Made in Vietnam” message.
The latest fact is a big problem for Nike’s plans for a turnan under Chief Executive Officer Eliot Hill, who launched Womero 18 this year to conquer runners who moved to other brands. Vietnam has become a global center for the production of athletic shoes – and he is subject to some of the most punishing US tariffs imposed by US President Donald Trump this week.
Trump said he wanted to restore production to our shores. Analysts say the most likely effect will be higher prices for trainers, as the United States has no factories with specialized equipment to make running shoes and manage workers to manage them.
US -based Nike launched production in Vietnam in 1995, through five contract footwear factories, becoming one of the earliest foreign investors in the country and contributing to its exports and economic growth. The company quickly expanded its supplier base in the coming years and created thousands of jobs, attracted by cheaper labor.
Nike There are now 130 Vietnam supplier factories that produce shoes, clothing and equipment, and the country is half the production of footwear.
AdidasHis German -based rival receives 39 % of the shoes from the country of Southeast Asia.
Trump’s new 46 percent tariff will be set at the top of 20 % duties already paid by the import of athletic shoes up, according to the American Clothing and Footwear Association.
Manufacturers could open trainer factories in new countries, but relocating footwear supply chains usually takes about two years, said Chris Rogers, Head of Supply Chain Intelligence in the Global Market of S&P. Companies usually plan such changes in the five -year cycle.
Adam Cochran, Deutsche Bank’s analyst, said Mexico, Brazil, Turkey and Egypt could be alternatives to Vietnam as production centers. However, due to the length of the order contracts with suppliers, it will take 18 to 24 months for each decision to result in material changes on the terrain.
Also, Trump has imposed a so -called reciprocal Tariffs at a minimum rate of 10 % of virtually every trading partner. For large footwear centers such as China and Indonesia, new rates are more than triple.
“Finding a cheaper market without leaving the planet will be difficult,” said David Mark, Senior Vice President of Consulting Consulting Services.
Nike did not respond to the commentary request. In a quarterly report submitted on Thursday, the company said: “We are moving through several external factors that create uncertainty and instability in the operational environment, including, but not limited to, geopolitical dynamics, new tariffs, tax regulation and fluctuating exchange rate.”
The company was appointed last year Hill As CEO after falling in sales as shoes for smaller competitive brands, such as ON and Joka grabbed the market share.
His shares have fallen to a nearly eight -year low this week, as investors have been scared of Trump’s new tariff costs.
For the footwear brand, “you have three basic roads here from the standpoint of cost mitigation,” said Dylan Card, an analyst at William Blair. “You can press back to get your suppliers (to) charge you less. You can try to press the consumer price and charge more. Or you can eat it.”
Cochran estimates that Adidas and Puma, another brand-based German-based brand with wide production operations in Vietnam, will need to raise prices in the United States by about 20 percent to maintain gross profit margins after tariffs, although the price can spread over time to reduce market damage. Both companies could be better than Nike because they sell less in the United States, he said.
Felix Dolell, an analyst at Mattsler Bank, said Adidas is “well positioned” for rising prices as a result of “broadband intensity of both the segment of life and in performance”.
Puma, on the other hand, would consider it “significantly harder to pass increased costs” because its efforts to rebrand as a premium shoe have failed to gain intensity – one of the reasons for replacement Chief CEO of Puma Arne Frandt on Thursday.
Overall, sports products manufacturers “viewed their range of products in the United States,” Denle said, causing less profitable products.
Adidas declined to comment. Puma said there is “multi-country-strategy for origin and many of the long-term partners in our supplier base can produce in several different countries”.
Vietnam got a new wave of production investment during Trump’s first term, when a trade war with Beijing began, prompting companies to distance production from China. Vietnam’s footwear suppliers are not only local companies, but also South Korean and Taiwanese groups working there.
Migration in Vietnam led its trade surplus with the United States to balloon at $ 123.5 billion last year, the third largest after China and Mexico. The White House used numbers for trading balance Calculate “Reciprocal” tariffs for each country.
Cochran, Deutsche Bank’s analyst, said the coaches’ brands may have to “reduce the volume of orders and divert more products to Europe, the Middle East and China”, which could result in increased competition in those regions.
In the United States, where 99 % of footwear is imported, Carden said the market could become more like the Soviet Union, when Russian residents paid foreign visitors a gorgeous premium for Levi’s jeans.
“We are behind the iron curtain,” he said.
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