US companies that mainly produce in Vietnam, such as Nike, Deckers, and American Eagle, are facing difficulties due to Mr. Trump's 46% reciprocal tax.
In recent years, Vietnam has become a popular alternative for businesses to diversify their production chains. However, with Mr. Trump recently adding Vietnam to the group of countries subject to the highest reciprocal tax - up to 46%, large corporations in the garment, furniture, and toy sectors may soon face increased costs.
Part of the increased costs may be passed on to the final consumer. Investors are worried that tariffs will increase prices, which may reduce revenue and narrow the profit margin of businesses.
Nike may be a typical case when it produces about half of its footwear in China and Vietnam. Of which, output from factories in Vietnam accounts for 25%. Efforts to restore its brand and improve its business results under new CEO Elliott Hill are also likely to be slowed by the reciprocal tariffs. At the end of the trading session on April 3 in the US market, the sportswear company's shares fell 14.44%.
Not only Nike, many other US companies in the footwear industry are also heavily dependent on production activities in Vietnam. According to data from the Footwear and Footwear Trade Association (FDRA), in 2023, nearly one-third of footwear imported into the US will come from Vietnam.
In November 2024, Steve Madden - a brand specializing in women's footwear, said it would reduce the number of products entering the US market from China by 45% in 2025. This move was made right after Mr. Trump won the presidential election. CEO Steve Madden - Edward Rosenfeld informed that Vietnam is one of the countries where the company is accelerating the shift to production. In the face of negative information about reciprocal taxes, this code plunged more than 16% after yesterday's trading session.
Vietnam is also the second largest country for suppliers of Deckers Brands. This company owns a series of shoe brands such as Hoka, Ugg, Teva, AHNU. As of early April, they have 68 supply partners in Vietnam.
Similarly, VF Corporation - The company, which owns apparel and accessories brands such as The North Face, Timberland, Vans and Jansport, also had 17% of its products made in Vietnam as of the end of last year. Deckers shares fell nearly 14.5%, while VF Corporation lost more than 28%.
Apparel maker American Eagle gets about the same amount of goods from China and Vietnam, at 10-20%. At an event last month, CFO Michael Mathias said the company aims to cut production from both markets to single digits in the second half of this year to cope with tariffs.
\American Eagle CEO Jay Schottenstein recalled that eight years ago, during Trump’s first term, the company also faced challenges and found a new plan. Schottenstein said there will be changes, but he is in no rush.
In addition to the footwear and fashion sectors, the US furniture industry is also increasingly dependent on Vietnam. In 2023, about 26.5% of products in this industry imported into the US are "Made in Vietnam". This figure is less than 3% less than goods from China.
In a meeting on business results in February, CEO Niraj Shah of furniture company Wayfair said that the shift of production from China is an increasing trend since Mr. Trump issued tax policies during his first term as President. According to Shah, Vietnam, along with Cambodia, Indonesia, Thailand, and the Philippines, have developed into production bases for businesses and Wayfair's goods also come from here.
The shares of this US furniture company also lost nearly 25.6% after yesterday's session. Wayfair said it will continue to closely monitor market developments.
Currently, Vietnam also plays a big role for American toy companies such as Hasbro, SpinMaster, Mattel, Crayola. In particular, Crayola cooperates with GFT Group - one of the largest toy manufacturers in Southeast Asia. GFT currently has 5 factories in the North with more than 15,000 workers. Shares of Hasbro and Mattel also fell more than 10% on April 3.
Curtis McGill - co-founder of Hey Buddy Hey Pal, predicted that the 46% tax rate could increase toy prices in the US. However, according to McGill, American businesses can negotiate with suppliers in Vietnam to reduce this increase. In fact, many toy companies have also discussed with manufacturers to ask for support because they are also under pressure to maintain selling prices with retailers.
According to Peter Baum, CEO of Baum Essex, the tax has caused great damage to his companies. “This is how a global recession starts. After 80 years and five generations, Trump just bankrupted us,” Baum said.
Based in New York, Baum Essex is a manufacturer of products for brands such as Nautica, Betsey Johnson and Steve Madden. In 2019, it moved its manufacturing from China to the Philippines, Cambodia, Vietnam and India.