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Investors just got hit with a wake-up call: the U.S. slapped a massive 46% tariff on Vietnamese goodspart of Trump's broadside against key Asian trading partners, including China, Cambodia, and Indonesia. The ripple effect? Consumer and apparel stocks got hammered. Nike (NYSE:NKE), which makes half its shoes in Vietnam, tanked 10.3% at 1.09pm. Lululemon (NASDAQ:LULU), Abercrombie & Fitch (NYSE:ANF), and Gap (NYSE:GAP)each heavily reliant on Vietnam and Cambodiafollowed suit, some dropping as much as 11%. It's not just tariffsit's uncertainty. Retailers are staring down rising costs, broken supply chains, and no easy fix.
Vietnam had been a clear winner in the last trade war, scooping up contracts from brands fleeing China. It had everything: cheap labor, skilled factories, trade pacts with the U.S. and EU. But now it's on the wrong side of the White House. Shifting supply chains isn't realistic, says Bloomberg Intelligence. Translation: companies are stuckfor nowand that means consumers foot the bill. With over $44 billion in textiles exported last year and major players like Adidas and Uniqlo all-in on Vietnam, this tariff hits where it hurts.
What triggered it? A record $123 billion trade surplus with the U.S.third only to China and Mexico. Despite Vietnam's olive branchescutting duties on U.S. ethanol, LNG, and even offering a golf trip to Mar-a-LagoTrump's team wants more. Investors should stay alert. This isn't just a bumpit could reshape sourcing strategies and margins for years. If you're holding retail names with Asia-heavy supply chains, keep your seatbelt fastened. The next quarter might look very different from the last
This article first appeared on GuruFocus.