Executive management teams are undoubtedly huddled in camera this morning while the Trump administration abandoned a bomb on public and consumption markets, imposing reciprocal rates in a wide range of countries. While many, including SGB MediaChina expected China to take the weight of the pain of new prices, we were wrong to assume such a limited impact or the scope of the problem.
The problem for many on the active lifestyle market, including sports items, shoes, clothing and outdoor, is the impact on products from Vietnam after many companies have invested considerable time and capital in the moving of China production – the clear goal for the prices for Trump and Biden – in Vietnam, which had no tariff problem.
But everything changed yesterday, on April 2, when Trump abandoned an additional 46% rate on goods arriving in the United States from Vietnam. The percentage seems ridiculous until we see that Vietnam imposes 90% rates and taxes on American products entering this market. This figure seems to open to debate because the “rates billed in the United States” in the graph below are based on a formula created by the Trump administration which is based in part on the trade surplus of each country with the United States, some maintain that the real price that Vietnam imposes on American products in less than 10%.
Vietnam was the beneficiary of the last tariff war (or trade) after Trump 1.0 imposed higher prices on goods made in China, most of which remain in place or increased under Biden. Some companies now have up to 50% of their production in Vietnam, compared to 0% to perhaps 15% when Obama has left its functions.
The equity prices for many companies in the active lifestyle market plunged overnight on Wednesday and Thursday morning while analysts and investors were heading for the doors like all the insurance of a limited exposure to the pricing impact received from companies reporting finance in the last 60 days.
No later than last week, the market heard that companies (think that Lululemon) explain that China was only 10% to 15% of their supply today, most of them moved production to Vietnam.
RBC Capital Markets Piral Dadhania analyst told customers in a note that TThe Ariffs are presented at a press conference on Wednesday afternoon, are harder than expected, especially for the countries of Southeast Asia with a higher exhibition in sports items.
UBS analysts have said that the tasks will concern many brands that have recently moved the manufacture of China in Vietnam. “The growing role of the latter in the manufacture of shoes as well as its significant contribution to imports of American shoes mean that prices represent a wind from the sector that companies may not be able To compensate completely“Wrote the firm in a note from Thursday morning.
CNBC estimates that Vietnam is responsible for $ 156 billion in global production for the American market.
The problem is not isolated from Vietnam either. They were just the largest beneficiary.
The other rates mentioned include 49% on Cambodia, 36% on Thailand, 37% on Bangladesh, 32% on Indonesia, 48% on Laos and 34% additional tariffs on China – in addition to the 20% already announced – for a total of 54%.
Other key business partners for the United States who are Subject to prices include Switzerland, the EU And The United Kingdom. The United States has interrupted an increase in prices in Mexico and Canada while the three neighbors have negotiated a plan forward.
However, UBS also noted that only part of the cost increases would probably be transmitted by to consumers. He reported has fully alleviate the blow has VietnamCompanies should increase prices between 10% and 12%.
Reuters said that in addition to active lifestyle market actions, fast fashion retailers like H&M, who mainly come from China and Bangladesh, and the owner of Zara Inditex have also been struck.
Reuters also pointed out that “new prices would increase the average American import rate on clothing from 14.5% in 2024 to 30.6%, according to Sheng Lu calculations, professor of fashion and clothing studies at the University of Delaware.”
“The prices of April 2 seem specially designed to tighten the clothing industry,“” said Dylan Carden, analyst at William Blair in Chicago.
Jefferies analysts noted that the United States had imported more than $ 15 billion in Vietnam textiles and clothing in 2024, or around 10% of US total American exports.
Nike would have produced around 50% of his shoes and around 28% of his clothes in Vietnam during his 2024 financial year completed on May 31, 2024, according to the latest annual report. Adidas relied on Vietnam for 39% of his shoes and 18% of his clothes last year ending on December 31. The fangs are even more exposed, with more than 50% of its production in Vietnam in the last three consecutive years, the company said during a recent annual deposit. Lululemon achieved 40% of its products in Vietnam in 2024 and 17% in Cambodia.
Athlema Parent Gap, Inc. indicated that 27% of its manufacture came from Vietnam in 2024, and 19% of Indonesia.
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