NKE: Nike Stock Logs Worst Day Since June as 46% Vietnam Tariffs Set to Dent Revenue

Athletic apparel maker produced about 50% of its footwear in Vietnam last year. Now, the country is staring into a steep 46% tariff.

📉 Shares Drop 14% on Vietnam Tariffs

• What happens when half of your company’s footwear production is based in a country that just got slapped with a hefty tax for no apparent reason? Nike should know. Nike stock NKE slipped 14% on Thursday after Donald Trump’s tariff list included a 46% tariff on all imports from Vietnam.
• In other words, Nike should start paying 46% on every sneaker made in Vietnam. Last year, it made about half of its footwear and nearly 30% of its apparel products in Vietnam.

👀 Nike’s Outlook from Swoosh to Swoon

• The company made more than $51 billion in revenue last year and the breakdown shows that over $20 billion came from products made in Vietnam. If the tax was applicable then, that would’ve resulted in just under $10 billion of tax Nike should’ve paid to the US government. Can Nike absorb that cost or will it pass it on to the consumer through higher prices?
• If the sports retailer chooses to go it alone, it would need to whip up a few more factories on US soil and raise its production costs. The average monthly pay in Vietnam is less than $200. And that’s how Nike’s growth outlook just shifted from swoosh to swoon.

🐧 Taxing the Penguins Is Wild

• In recent years, Vietnam has climbed up the ladder of importers to the US as more American companies in the apparel, furniture and toy space have set up factories for cheap labor. In 2024, imports from Vietnam into the US grew to $136.6 billion, up 19% from the prior year.
• Besides Vietnam, other odd choices for sky-high tariffs in Trump’s list include Cambodia, 49% tariffs, and Madagascar, 47% tariffs. A few remote and uninhabited islands (except for some penguins and seals) were also included in the list.