Category: General
Country: United States
Region: Asia
By Alex Halverson
Seattle Times business reporter
2nd April, 2025 at 5:35 pm
President Donald Trump announced baseline tariffs of 10% on all imported goods on Wednesday, as well as higher ones against products imported from Asian countries that will negatively affect apparel makers like Oregon-based Nike and department stores like Seattle-headquartered Nordstrom.
China, which already had a 20% tariff levied on its exports, faces an additional 34% after Trump’s announcement. The country is the largest textile exporter in the world, supplying apparel and footwear companies with tons of inventory.
But other countries have become huge sources. Companies like Nike increasingly rely on Vietnam and Indonesia, which now face 46% and 32% tariffs.
While announcing the “reciprocal” tariff plan, Trump repeated messages from the campaign trail that sweeping tariffs would eventually bring manufacturing and other jobs back to the U.S. Shifting production strategies may not be likely or even wise for retail companies, however, leaving them in an awkward and perhaps painful spot.
“There’s nothing they can do in the short term,” said David Swartz, a senior equity analyst for Morningstar. “And realistically they won’t do anything because nobody knows how long these tariffs will last.”
Companies like Nike and Lululemon have contracts with suppliers in Vietnam and China. Contracts they can’t get out of or get around easily.
It’s not just apparel makers that will be affected. Department stores like Nordstrom are vulnerable to rising costs as well, Swartz said.
Retailers, which have struggled recently, may not weather a trade war as easily as Nike with its cash reserves or Lululemon, which might not see a decrease in demand with higher prices. Even in a strong economy, traditional retailers haven’t generated strong revenue growth.
“Most of what Nordstrom and other retailers sell is imported and that’s not going to change,” Swartz said. “Their biggest hope is that tariffs won’t last long. If they last for two months, the companies will survive. If tariffs last for a couple of years, they’ll get worried.”
Swartz said Nordstrom doesn’t have the pricing power of other retailers, meaning it could also be squeezed by rising costs and lose demand. Nordstrom’s discount Rack stores are popular, but if it has to pass off import costs to customers it could drive business to stores like Marshall’s that buy inventory already in the U.S.
But despite that, Swartz said Nordstrom will be able to get through trade turmoil. It’s about to be taken private by Nordstrom family members and a Mexican retail group through a $6.25 billion deal, which will keep it away from the scrutiny of Wall Street.
Following Trump’s announcement, which happened minutes after markets closed, share prices for Nike, Lululemon, Gap and other apparel makers tumbled. Nike’s stock priced dropped 7% and Gap’s fell by more than 8%. Lululemon’s slipped more than 11%.
Courtesy: seattletimes.com
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