- President Donald Trump announced a trade deal with Vietnam that leaves tariffs on the major exporter at 20%.
- The US imports about 10 times more goods in value from Vietnam than it exports each month.
- Apparel brands like Nike could soon hike prices due to a large number of suppliers in Vietnam.
From Lululemon leggings to Nike sneakers, your favorite apparel may soon get pricier.
With less than a week left for the US to strike deals before additional higher tariffs imposed on April 2 come back, Wednesday morning started with President Donald Trump announcing a deal with Vietnam, saying that details of the deal would follow.
Apparel stocks like Lululemon, Nike, and Columbia Sportswear immediately spiked following his announcement.
The shares, however, tumbled within the next hour when Trump announced that not only would a 20% tariff apply to Vietnam, which is higher than the 10% baseline tariff currently on all imports, the tariff would be 40% if the companies reroute products from a different country through Vietnam, known as “transshipping.”
Nike and Columbia Sportswear eventually recovered their gains, and Lululemon broke even at the end of the day.
In exchange, Trump said that Vietnam has agreed to zero tariffs on all US exports to the Asian country. According to data from the US Census Bureau, the US imports more than 10 times of goods in value from Vietnam each month compared to what Vietnam absorbs from the US.
Popular apparel makers remain vulnerable to a 20% tariff on Vietnam.
According to Lululemon's latest active supplier list from April, 38 out of 144 of their suppliers are located in Vietnam. Based on Nike's sustainability interactive map, the company works with more than 130 factories in Vietnam, which make up around 25% of all its factories. In comparison, only 5% of Nike factories are in the US.
Similarly, according to Columbia Sportswear's "corporate transparency map" more than 230 out of the 1017 suppliers the company works with are located in Vietnam.
Since April 9, when Trump announced a 90-day pause on some of the highest tariffs imposed on 75 trading partners, there have been talks of negotiations with Japan, Thailand, and the EU. But the talks have thus far only yielded one completed deal with the UK aside from the new agreement with Vietnam.
Over the past week, Trump had said on Fox News Channel's "Sunday Morning Futures" that he would be sending out tariff letters on July 9 when the tariff pause expires, signaling that there may not be an extension of the same scale.
"Congratulations, we're allowing you to shop in the United States of America, you're going to pay a 25% tariff, or a 35% or a 50% or 10%," Trump said of what would happen.
"We'll look at how a country treats us — are they good, are they not so good — some countries we don't care, we'll just send a high number out," Trump added.