**Washington**: President Trump’s significant 46% tariff on imports from Vietnam is set to challenge American brands like Nike and Hasbro, prompting concerns over rising production costs and potential price increases for consumers as companies consider relocating manufacturing operations.
President Donald Trump’s latest trade policy decisions are anticipated to have considerable repercussions for American companies, particularly those in the clothing, furniture, and toy industries. As part of an expansion of global tariff measures, Trump has announced a hefty 46% tariff on imports from Vietnam, which could present significant challenges for numerous prominent brands that rely heavily on production in the Southeast Asian country, according to a report by CNBC.
Vietnam has become an increasingly popular manufacturing hub for international firms, offering a cost-effective alternative to China amid the latter’s imposition of strict tariffs by the United States. In 2024, imports from Vietnam surged to $136.6 billion, marking a 19% increase from the previous year, as per data from the Office of the United States Trade Representative. However, the introduction of these stringent tariffs now poses a dilemma for companies that had previously begun to establish their operations there.
The new tariffs are set to take effect on April 9 and are expected to impact a wide range of American businesses. Nike, a major player in the footwear market, is particularly vulnerable, as approximately a quarter of its shoe production takes place in Vietnam. In anticipation of these tariffs, Nike’s stock has already fallen by over 6%.
Other major brands that could feel the brunt of the new tariffs include Adidas, Steve Madden, and VF Corporation, which oversees brands such as The North Face, Timberland, and Vans. American toy manufacturers such as Hasbro and Mattel are also significantly reliant on production in Vietnam, along with Wayfair, an online furniture retailer. The stock of Wayfair dropped by 12% following the announcement of the new tariffs, illustrating the immediate market response to the news.
The implications of these tariffs could extend to American consumers as well. The Footwear Distributors and Retailers of America, a trade group for the industry, reported that nearly one-third of shoe imports to the U.S. originated from Vietnam in 2023. In the furniture sector, Vietnam accounted for 26.5% of total imports. Businesses will have to navigate these new tariffs carefully to maintain their competitiveness in the U.S. marketplace.
As companies brace for potential price increases, there are concerns about whether they will be able to absorb the elevated production costs without passing them onto consumers. With consumers already becoming more selective about their spending habits, adjusting to higher prices could prove to be a challenging transition for these businesses. Curtis McGill, co-founder of toy company Hey Buddy Hey Pal, stated to CNBC, “Many companies are already in discussions with manufacturers who must help us in some ways. Toy companies are under pressure from retailers to try to keep prices low,” although specifics regarding this assistance were not provided.
Amid these changes, the question of relocating manufacturing operations is becoming more pressing. Companies are examining alternative locations such as India, Cambodia, or Mexico as potential new bases for production. Representatives from American Eagle, a notable apparel brand, expressed the need for flexibility and monitoring in light of the tariffs. CFO Michael Mathias and CEO Jay Schottenstein acknowledged that while they aim to diversify their production away from Vietnam and China by the second half of 2025, they are cautious about making hasty decisions, as the full impact of the situation remains uncertain.
The financial and operations director of Baum Essex, which has licensing agreements with brands like Nautica and Steve Madden, noted the damaging nature of the current tariff policy. Reflecting on the historical context, he remarked, “This is how a global depression begins. After 80 years and five generations, Trump has simply knocked us out of operation.”
While the extent of the tariffs’ impact on consumers remains to be seen, American companies are entering a phase fraught with uncertainty. The increase in tariffs raises significant questions regarding the future viability and cost-effectiveness of manufacturing in Asia. How businesses respond to these new conditions will be pivotal for their long-term sustainability.
Ultimately, the trajectory of trade relations between the United States and Vietnam is poised for further developments, contingent upon political decisions that could influence global supply chains and economic dynamics moving forward, as noted by CNBC.
Source: Noah Wire Services
Subscribe to Industry Updates
