Nike and adidas Stocks Plunge Following Trump’s 'Liberation Day' Tariffs
On April 2, Trump delivered even more of his current form of power trip: tariffs. This new round slapped 34 per cent on China, 46 per cent on Vietnam and 32 per cent on Indonesia. This is on top of the tariffs he already imposed earlier in the year, leaving China with a total of 54 per cent.
As we explored in , most major brands have their manufacturing hubs in these countries, with , and set to be hit the hardest since they all have over 90 per cent of their manufacturing in the three impacted regions. has 65 per cent, while is the lowest at 55 per cent thanks to their Flimby, Maine and Massachusetts factories.
While these high tariffs won’t affect the brand’s entire sales – Nike’s United States sales account for 42 per cent while adidas is only 22 per cent – Trump also applied a 10 per cent universal tariff to all goods coming into the US, meaning New Balance’s Flimby factory isn’t safe, nor is wherever else the major brands manufacture their remaining product. Safe to say this has spooked investors. Since the announcement, Nike stocks have plummeted by 14.4 per cent, while adidas and PUMA have dropped by 11.7 and 11.1 per cent respectively.
For sneakers, this means an-almost guaranteed increase in prices. Brands have only recently regained healthy profit margins, so it’s doubtful they will risk this by absorbing the cost of the tariff. It will instead be passed on to the American consumer. The , ‘Research has generally found that US consumers and businesses are the ones absorbing the costs from higher levies … To avoid weaker profits, companies often choose to hike prices and pass some of that cost on to consumers instead’.
The tariff is calculated from the FOB, which is the freight on board price of the goods (rather than the retail price). An Air Jordan 1’s FOB price is estimated to be between $20–$30, so if it was made in Vietnam, Nike are charged an additional $9–$14 per pair. The Swoosh produce and sell approximately 800 million pairs of shoes each year, and with 42 per cent of them sold to the United States, that leaves them with an additional $3 billion in tax per year.