Stocks of leading US clothing producers rose on Wednesday following President Donald Trump’s announcement of a trade deal with Vietnam that establishes import tariffs well below previously threatened levels, providing relief to brands with heavy dependence on Southeast Asian manufacturing.
After long negotiations, the agreed deal levies a 20% duty on Vietnamese imports—half of the 46% that Trump threatened in April. The news caused investors to be hopeful, with shares of Nike climbing by 3.6%, Under Armour by 2.3% and Levi Strauss by 1.6%. GAP and Abercrombie & Fitch also ticked higher, but less than 1%.
The deal arrives as most fashion brands continue to divest production from China towards Vietnam, Cambodia and Indonesia due to rising trade tensions and tariff volatility. The sector had been preparing for increased expenses following Trump’s proposal for sweeping mutual tariffs on imports from the three countries earlier this year.
David Swartz, Morningstar Research equity analyst, told Reuters that this sends a message to investors that a lot of the more combative tariff threats potentially will get rolled back.
Although the agreement lowers tariffs on direct Vietnamese imports, it incorporates a steep 40% tariff on Vietnamese goods transshipped through third nations. Nevertheless, Trump promoted the deal on Truth Social, saying it guarantees more market access for US products, with no tariffs for US exports to Vietnam.
Vietnam continues to be a key part of Nike’s international supply chain—manufacturing about half of its brand shoes in fiscal 2024, based on the company’s annual report. While tariffs might add up to as much as US $ 1 billion in expenses, Nike reaffirmed last week that it believes it can make up for the effect through forward-looking planning and strategic realignment. North America continues to be Nike’s largest market by revenue.
The spillover effects translated to other industries too. Best Buy shares experienced a small surge, with the electronics store having already factored in a 10% base tariff in its May outlook.
“The sharp duty on transshipments stands out, but I think suppliers will move quickly to reroute and avoid exposure,” said Matthew McCartney, Analyst at Wedbush Securities. “Generally, this agreement brings much-needed clarity to a crucial manufacturing hub and reduces downside risk, especially for firms like Best Buy.”
The agreement is being seen as a strategic victory for US retailers that rely on Vietnam’s surging manufacturing industry—providing both tariff relief and supply chain security within a politically volatile trade climate.
