Shares of Nike (NKE) and other apparel companies climbed on Wednesday after U.S. President Donald Trump announced a finalized trade agreement with Vietnam. Indeed, the deal sets tariffs on Vietnamese imports at 20%, which is less than half of the 46% rate proposed back in April. As a result, this lower rate eased the fears that had been growing for months due to potential cost spikes in supply chains.
Elevate Your Investing Strategy:
- Take advantage of TipRanks Premium at 50% off! Unlock powerful investing tools, advanced data, and expert analyst insights to help you invest with confidence.
Many apparel makers, including Nike, had already begun shifting production from China to countries like Vietnam, Cambodia, and Indonesia in anticipation of steeper tariffs. With the finalized rate now lower than expected, investors see the move as a positive sign that some of the previously threatened tariffs may be rolled back. The agreement also includes a 40% tariff on goods that are trans-shipped through Vietnam from other countries and opens Vietnam’s market further to U.S. exports, with no tariffs on American goods.
It is worth noting that Vietnam remains key to Nike’s operations, as it produced roughly half its footwear in Fiscal 2024. While the company estimated that tariffs could cost it up to $1 billion, it also said that it expects to manage the impact over time. In addition, analysts noted that although the trans-shipping clause adds complexity, suppliers are likely to adapt quickly to avoid the extra fees, which reduces the risk for companies.
Is Nike Stock a Buy or Sell?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on NKE stock based on 17 Buys and 13 Holds assigned in the last three months. Furthermore, the average NKE price target of $76.70 per share implies 0.6% upside potential.
