Retail and footwear stocks with deep manufacturing ties to Vietnam moved higher Wednesday after President Donald Trump announced a new trade agreement with the Southeast Asian nation.
While the deal introduces a 20% tariff on Vietnamese imports—up from the 10% temporary rate but well below the threatened 46%—it also grants U.S. firms unprecedented market access, reducing Vietnamese tariffs on American goods to zero.
Footwear and Apparel Stocks React to Eased Tariff Terms
Nike (NKE) led early gains among apparel names, rising more than 3% before settling up 1.7% by midday. Shares of On Holding (ONON), which also manufactures heavily in Vietnam, jumped more than 3.5%, while Deckers (DECK) and Lululemon (LULU) saw smaller but notable advances.
The market welcomed clarity after months of uncertainty following Trump’s initial “Liberation Day” tariff blitz in April, which temporarily set a 46% import duty on Vietnamese goods. That figure sparked industry-wide concerns about rising costs and disrupted supply chains. With the new deal lowering the tariff to 20%, and only slapping a steeper 40% penalty on goods routed through Vietnam from China, investor sentiment in the retail sector improved.
For companies like Nike, which has steadily shifted manufacturing from China to Vietnam—where around 50% of its footwear is now made—the new structure offers a more stable, if still elevated, cost backdrop. Last week, Nike warned that it expects to incur nearly $1 billion in tariff-related expenses this fiscal year, prompting “surgical” price hikes starting this fall. Wednesday's deal may ease those pressures slightly.
Supply Chain Shift to Vietnam Pays Off for U.S. Retailers
Vietnam has become a key node in the global supply chain for U.S. retailers, offering both labor cost advantages and reduced geopolitical risk compared to China. As Trump doubles down on tariffs against China and floats even steeper levies against Japan, companies like Lululemon and Nike are looking smart for having diversified early.
Even with the 20% rate now formalized, it represents a significant improvement from the worst-case scenario. More importantly, the reciprocal element of the deal—Vietnam opening its markets entirely to American goods without tariffs—is a unique concession that could unlock new revenue opportunities for U.S. brands.
Still, investor caution lingers. Rivals in the apparel space remain exposed to transshipping risks if they rely on China-linked supply chains routed through Vietnam. And with a July 9 deadline approaching to finalize or renegotiate other paused tariffs, uncertainty remains high for companies sourcing from Japan, India, and elsewhere.
Lululemon Faces Legal Battle as Trade Winds Shift
As trade rules shift, Lululemon has also moved to protect its intellectual property. The company this week filed a lawsuit against Costco, accusing the wholesale giant of selling unauthorized knockoffs of its popular athleisure wear under the Kirkland brand.
The suit targets items such as the Hi-Tec Men’s Scuba Full Zip jacket, retailing for less than $20, which Lululemon argues closely resembles its $100-plus offerings like the Scuba hoodie and Define jacket. The company is seeking a halt to the sales and monetary damages, citing consumer confusion and brand dilution.
This legal move comes amid broader efforts by Lululemon to safeguard premium pricing in a “dupe” economy where fast fashion and discount brands imitate high-end designs with increasing accuracy and speed. As tariff policy shifts, so too does the battlefield for brand value—moving from international trade to domestic courtrooms.
Conclusion
Wednesday’s Vietnam trade deal marks a notable win for U.S. apparel and footwear companies, especially those that bet early on Vietnam as a manufacturing hub. For Nike, Lululemon, and others, the lowered tariffs and reciprocal access offer a chance to recover margin lost to years of trade friction. But the industry remains far from calm, with pending trade deadlines, legal battles, and volatile consumer demand keeping investors on edge.
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