Nike’s stock took a significant hit on Thursday, following President Donald Trump’s announcement of new tariffs that will disrupt the long-standing free trade policy in the United States. The company’s shares fell by 11.3%, bringing the price down to $57.62. This drop comes as investors worry about how rising supply chain costs will affect Nike’s profits. The stock’s decline marks its lowest point since November 2017 and extends a rough streak that has seen a 23.5% drop this year.
On Wednesday evening, Trump revealed a series of reciprocal tariffs, which include a 34% tariff on imports from China and even higher rates on other countries. Vietnam will face a 46% tariff, Cambodia a 49% tariff, and Indonesia a 32% tariff. This move has sent shockwaves through the market, with shares of Nike, Adidas, and Puma all experiencing sharp declines.
Experts note that these tariffs are particularly challenging for companies like Nike, which have shifted production to lower-cost countries like Vietnam to reduce reliance on China. BMO Capital Markets analyst Simeon Siegel pointed out that this announcement has shown that there are few places left to turn for cost-effective manufacturing.
Nike operates numerous factories across Asia, including 117 in China employing nearly 108,000 workers and 130 in Vietnam with about 460,000 workers. The company also has 24 factories in Cambodia, 24 in Thailand, and 45 in Indonesia. In contrast, Nike has only a small presence in the United States, with just 5% of its factories located there and less than 1% of its workforce.
The average salary for workers in these Asian countries is significantly lower than in the U.S. For instance, the average yearly salary in China is around $10,000, while in Vietnam it is about $7,200. In the U.S., the average salary is approximately $67,000, highlighting the stark differences in labor costs.
As the situation develops, analysts and investors will be closely watching how these tariffs impact Nike’s operations and overall market performance.