Nike Likely to Hike Prices More After Vietnam Tariff Deal
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Nike Inc. will face pressure to raise prices higher than expected after the U.S. and Vietnam reportedly reached a new trade agreement that boosts tariffs, according to an analyst.
“Nike already plans surgical price increases, and we expect this plan to move forward, with potentially higher increases than prior plan,” Raymond James analyst Rick Patel wrote in a research note to clients July 2.
U.S. President Donald Trump said the accord will place 20% tariffs on goods coming from Vietnam. That’s double the 10% the U.S. enacted in April. Before Trump’s second term, the U.S. had levies of about 8% on nonagricultural products from Vietnam.
Patel said the increased tariffs will also reduce gross margin more than expected at Nike and other companies that source from Vietnam, including Under Armour, Skechers USA, On Holding AG, Lululemon Athletica and Deckers Outdoor Corp.
Shares of Nike were little changed July 3 after gaining about 4% on July 2 when Trump talked about the deal on social media. Investors might have been pleased that the levies on Vietnam will only be 20%. The market expected a tariff rate of 25%-30%, Patel said.
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