Nike (NKE) shares plummeted 6.87% in after-hours trading on Wednesday following President Trump's announcement of reciprocal tariffs, including a significant 46% tariff on Vietnamese imports. This development poses a substantial threat to the sportswear giant, which sources approximately 50% of its footwear and nearly a third of its apparel from Vietnam.
The proposed tariffs could force Nike to either absorb higher production costs or raise prices for consumers, both of which could strain the company's profitability. This comes at a particularly challenging time for Nike, as the company has been grappling with softening sales and underperforming stock prices. Over the past year, Nike's stock has already declined by 30.03%, significantly underperforming the S&P 500's 7.42% gain during the same period.
The impact of these tariffs extends beyond Nike, affecting other major players in the footwear and apparel industry such as Adidas, Puma, and On Holding. As the April 2 enforcement date approaches, companies in the sector may need to quickly reevaluate their sourcing strategies and pricing models to mitigate the impact of these tariffs, potentially leading to price increases for American consumers. The situation highlights the vulnerability of global supply chains to geopolitical tensions and trade policies.
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