By Juveria Tabassum
(Reuters) -Shares of Nike and other apparel makers rose on Wednesday after U.S. President Donald Trump said he had struck a trade deal with Vietnam that would impose a lower than initially expected tariff rate on many imports from the Southeast Asian country.
After months of negotiations, Trump’s trade deal with Vietnam includes a 20% tariff on imports from Vietnam, lower than an initial 46% rate he had announced in April.
Apparel makers have been diversifying production out of China to Vietnam, Cambodia and Indonesia, as Trump’s reciprocal tariffs on imports from these countries proposed in April raised concerns over supply chain costs as well as higher product prices.
“Investors may be looking at this as a sign that many of the threatened tariffs (on Vietnam and other countries) will be rescinded,” Morningstar Research analyst David Swartz said.
The deal also includes a 40% levy on trans-shipments from third countries, and Vietnam would provide the U.S. with more market access, with no tariffs on U.S. exports into Vietnam, Trump said in a post on Truth Social.
Nike’s shares were up nearly 3.6%, Under Armour rose 2.3%, and Levi Strauss gained 1.6%. Shares in Gap and Abercrombie & Fitch were up less than 1%.
Vietnam manufactured about 50% of total Nike brand footwear in fiscal 2024, according to the company’s annual filing. North America is Nike’s largest market by revenue.
Tariffs could add about $1 billion to its costs, but Nike expects to fully mitigate the impact over time, it said last week.
Shares of electronics retailer Best Buy were up marginally. The company had factored in Trump’s base tariff rate of 10% in its annual forecast in May.
“The transshipping aspect is an important wrinkle, but I’d expect suppliers will quickly move to adjust supply chains to avoid paying that hefty duty,” said Matthew McCartney, analyst at Wedbush Securities.
“Bigger picture, this deal brings clarity to the industry for a critical consumer electronics hub and eliminates some downside risk to Best Buy’s outlook.”
The companies — including Nike, Adidas, Puma and Levi — did not immediately respond to a Reuters request for comment.
(Reporting by Juveria Tabassum in Bengaluru; Editing by Alan Barona)