The recent imposition of a 46% tariff by the U.S. on Vietnamese imports has cast a shadow over global sportswear supply chains, particularly impacting major players like Nike, Adidas, and Puma. These brands, which had shifted production to Vietnam due to its cost-efficient labor market, now face significant challenges in mitigating the financial impact.
The Nike Vomero 18 running shoe, prominently displayed in New York stores, is a testament to Vietnam's pivotal role in athletic footwear manufacturing. However, its "Made in Vietnam" label has become a liability in light of the punitive tariffs imposed by the Trump administration.
Vietnam, a hub for global sports shoe production, accounts for 50% of Nike's total footwear output and 39% of Adidas' global shoe manufacturing. Nike began its operations in Vietnam in 1995, establishing five contract factories and becoming one of the earliest foreign investors in the region. Over the years, the company expanded its footprint to 130 factories, creating thousands of jobs and contributing to Vietnam's export-driven economic growth.
However, the newly announced 46% tariff is layered on top of the existing 20% duty for U.S. imports of athletic shoes with textile uppers, as noted by the American Apparel & Footwear Association.
While companies could explore moving production to other countries, relocating footwear supply chains is a complex process. According to Chris Rogers, head of supply chain research at S&P Global Market Intelligence, such transitions typically require two years, with planning cycles spanning five years.
Potential alternatives to Vietnam, such as Mexico, Brazil, Turkey, and Egypt, have been identified. However, Adam Cochrane, a Deutsche Bank analyst, cautions that due to existing supplier contracts, tangible shifts in production would take 18 to 24 months to materialize.
Sportswear brands now face a trio of cost mitigation strategies: negotiating lower supplier costs, increasing consumer prices, or absorbing the financial burden.
Adidas and Puma, which also have significant operations in Vietnam, might need to raise U.S. prices by 20% to maintain profit margins, Cochrane estimates. While Adidas' strong brand positioning may enable it to manage price increases, Puma could struggle due to challenges in rebranding as a premium shoemaker.
The tariffs' broader economic repercussions are evident, with Nike's stock plummeting to an eight-year low as investors grow wary of rising costs. The company acknowledged the uncertain environment in its latest quarterly report, citing geopolitical dynamics, new tariffs, and fluctuating exchange rates as critical challenges.
Vietnam’s manufacturing sector benefited from a surge in investment during Trump’s initial trade disputes with China. South Korean and Taiwanese groups operating in Vietnam played a significant role in supplying global footwear brands. This shift contributed to Vietnam's $123.5 billion trade surplus with the U.S., making it the third-largest after China and Mexico.
However, rising tariffs are likely to force brands to reduce order volumes and redirect products to Europe, the Middle East, and China, intensifying competition in those markets.
With 99% of U.S. footwear being imported, the market faces significant disruption. Dylan Carden, an analyst at William Blair, likened the current scenario to a Soviet-style economy, where limited availability led to inflated prices and restricted consumer access.
“We’re behind the Iron Curtain,” he remarked, alluding to the diminished accessibility and potential for price surges in the U.S. market.
As the global trade landscape continues to evolve, manufacturers and retailers will need to navigate the complexities of cost management, supply chain diversification, and competitive market positioning. The months ahead promise significant challenges for the sportswear industry, with tariff-induced pressures reshaping both regional and global dynamics.
Source: https://www.ft.com/content/c6fee2b2-5860-40ae-a2de-813f5898dc86
The slowdown in global tonnage that began in the latter half of March accelerated in week 14 (March 31 – April 6), according to the latest weekly figures from WorldACD Market...
At the core of this vision lies the Menzies Aviation Cargo Handling (MACH) system, a cloud-based, standardized cargo management platform being deployed across 54 locations...
These pivotal issues will take center stage at the IATA World Cargo Symposium (WCS) 2025, to be held in Dubai from April 15–17. Industry leaders will convene to explore strategies...
In a bid to avoid punitive U.S. tariffs, Vietnam has pledged to crack down on Chinese goods being rerouted through its territory and to implement stricter controls on sensitive...
Logistics management plays a significant role in corporate carbon emissions, accounting for approximately 70% of total emissions in supply chains. Sustainable logistics not...
The United States has implemented sweeping tariffs on over 60 countries, with China bearing the brunt at a staggering 104% tariff rate. This move is part of a broader trade...
The global trade landscape is experiencing significant upheaval following President Donald Trump’s recent tariff announcements, with widespread impacts reverberating through...
Worldwide air cargo tonnages grew by +3% year on year (YoY) in the first three months of 2025 with average global rates rising +4%, YoY according to preliminary first-quarter...
On April 2, 2025—referred to by President Donald Trump as “Liberation Day”—a sweeping new tariff plan was unveiled, signaling a significant shift in the United States' approach...
ALS