Clothing and accessories retailers across the US are delaying orders and freezing hiring ahead of tariff hikes that take effect today on products imported from Vietnam and China.
These businesses, much like Nike and Lululemon, face an impossible choice: offset the cost of tariffs by raising prices by some 40 per cent – potentially cratering sales – or absorb the cost increase and further strain already-thin profit margins.
Unlike their bigger rivals, however, the smaller clothing and shoemakers lack vast supply chains, making them highly dependent on Vietnam and China.
Footwear Distributors and Retailers of America – whose members include Nike, Walmart, Skechers and Deckers – calculated that a $155 running shoe made in Vietnam would have to be marked up to $220 in US stores to offset the 46pc tariff.
Vietnam has developed specialised factories producing everything from high-tech running shoes to track suits. It’s the second-biggest source of clothes and shoes imported to the US after China, and a key manufacturing hub for Nike, Adidas and others.
Vietnam has asked for a 45-day delay in the imposition of US tariffs, and said it would buy more American goods, after Trump and Vietnamese leader To Lam agreed on Friday to discuss a deal to remove the levies.
Nike shares have dropped 14pc since markets closed on April 2, the day Trump announced tariffs, while Adidas shares lost 16pc, Puma shares are down 18pc, and North Face-owner VF Corp shares fell 31pc.
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