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Home » How tariffs affect retail, Nike
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How tariffs affect retail, Nike

i2wtcBy i2wtcJuly 3, 2025No Comments4 Mins Read
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The retail industry is breathing a sigh of relief after it appeared to avoid the worst case scenario on Vietnam tariffs.

But some executives believe the tentative trade deal President Donald Trump announced Wednesday is still bad for business and could have a chilling effect on consumer spending. 

“It’s a lot better news than where we were on Liberation Day,” one CEO of a popular consumer brand told CNBC after Trump said tariffs on Vietnamese imports would be 20%, down from the 46% levy he proposed on April 2, then later suspended. The new rate would be double the 10% duty currently in place.

Another executive called the news “bad” but agreed that a 20% tariff was better than the 46% duty Trump originally imposed, however unrealistic the proposed rate was.

“I guess Trump needs ‘positive’ news,” a third executive said. “I think things are going to evolve. Let’s see if this is definitive.” 

Trump’s announcement on Wednesday came only days before the 90-day suspension of the steep tariffs he proposed in April expires next week, and as his administration scrambles to strike agreements with dozens of trading partners. Even so, he did not say when the deal with Vietnam would take effect, or whether both sides have agreed to the tariff rates.

In the months between Trump’s April 2 tariff rollout and his announcement on Wednesday, retail executives in the apparel and footwear industries fretted over the potential that Vietnam imports could face tariffs nearly as high as the cumulative 55% duties for Chinese imports. 

Over the last decade, some of America’s top retailers, including Gap, American Eagle and Nike, have all reduced their reliance on China to shield themselves from both high tariffs and the region’s geopolitical turbulence. 

Many sought refuge in Vietnam, where the factories, some owned by Chinese businesses, are known to produce products at a similar quality and price as China. They also started manufacturing in other countries in southeast Asia, such as Cambodia, Bangladesh and Malaysia. Those countries were facing tariffs of 49%, 37% and 24%, respectively, under Trump’s April plan, but are subject to a 10% duty for now.

Vietnam is now the second largest supplier for footwear, apparel and accessories sold into the U.S. market, according to the industry trade group the American Apparel & Footwear Association. It has become an essential part of the footwear supply chain, on pace to become the largest supplier of shoes to the U.S. in 2025, according to the Footwear Distributors and Retailers of America, another industry trade group.

If Trump’s proposed 46% tariff on Vietnam had taken effect, it would mean much of the industry’s work to leave China would have been for naught. Some companies are relieved the tentative deal would set the levy at 20% and the announcement agreement is also a sign that Cambodia, Malaysia and Bangladesh could reach similar frameworks. 

“Twenty percent is a sigh of relief,” said Sonia Lapinsky, a partner and managing director at AlixPartners who advises fashion brands. “There’s some positivity and some optimism that this is manageable. So at least there’s that. This isn’t business destroying, which is great. However, this does have real implications, right?”

Most companies have plenty of tools to offset the impact of tariffs, such as working with their suppliers to share costs. But to avoid major hits to their profit margins, many including Nike are planning to raise prices. It’s still unclear how those hikes will affect consumer spending because it will take time for the increases to trickle down in the supply chain. 

AlixPartners previously created pricing models for CNBC that examined how the price of Vietnamese-made sweaters and shoes could rise under Trump’s proposed tariffs — if retailers do not pass any of the cost on to suppliers or shoppers. At a 10% levy, the cost of a $95 pair of men’s shoes could rise by $7.42 to $102.42. With a 20% duty in place, the cost increase would be even larger.

Many executives worry any tariff hike of this magnitude will be bad for businesses and consumers. Paul Cosaro, the CEO of Picnic Time, a supplier to top retailers like Target, Kohl’s and Macy’s, said if the clocks were wound back to April and Trump said there’d be a 20% tariff on Vietnamese imports, “no one would’ve been happy.” 

“There could be threats of a 46% tariff and you come back with 20 and it’s going to sound better but… it’s just more money coming out of the consumers’ pockets at the end of the day and they have less money to spend on picnic baskets and coolers and things like that,” said Cosaro, who raised his prices between 11% and 14% earlier this year to offset the cost of China tariffs.

“It’s not good for the consumer. Ultimately, it’s just increasing the prices … I don’t think that’s good news.”



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