[Global Times Special Correspondent Zhang Jinruo in Vietnam, Special Correspondent Feng Yaren in the United States, Journalist Ni Hao and Yuan Jirong] Editor's note: "If Americans desire higher prices for sneakers, lower quality, and fewer style options, then President Trump's tariff policy is perfect, but evidently this is not what Americans want." The American Yahoo Finance website made such a comment on September 9th. Regarding President Trump's previous remarks that tariffs would promote American manufacturing and protect jobs, Nike and other American sneaker manufacturers not only showed no signs of cooperation but also expressed concerns about finding alternatives to production outside Asia. Some industry insiders frankly stated that the revival of the sneaker manufacturing industry will not appear in the United States.
Trump's Stroke of the Pen Raised Sneaker Prices
"At Nike's headquarters in Oregon, executives are racking their brains to figure out how to properly share the pain brought by the new round of tariffs," Bloomberg reported on September 9th. This well-known American brand is now caught up in a global economic storm. Faced with nearly all production lines located in Asia, management is struggling to find alternatives. The report cited internal sources as saying that both Nike itself, its contract manufacturers, wholesalers, and ultimately consumers may be caught in this chain reaction of cost transfer.
Analysts generally believe that Nike cannot quickly restructure its supply chain in the short term. Vietnam, China, and Indonesia are Nike's three main shoe product production countries, accounting for 95% of total capacity combined. According to company disclosures, these three countries employ approximately 850,000 workers serving Nike - a scale even exceeding the total number of employees at Foxconn, Apple's supplier.
John Kern of TD Cowen said, "There is no other place globally that can simultaneously provide such capacity and low labor costs." Ana Andriyeva of Piper Sandler said that Nike might pressure suppliers to bear more costs or further streamline operations and collaborate with retailers to raise prices. However, she also warned that this path has its limits. "The biggest question now is: How much price increase can consumers endure?"
Nike's largest retail partner, Foot Locker, executives stated last week that they are continuously communicating with the brand regarding pricing strategies and assessing how much of the tariff costs will be borne by American consumers.
Nike store on Fifth Avenue in New York City (Visual China)
According to Yahoo Finance, tariffs will cause a 25% to 45% price increase in the U.S. sneaker consumption market worth about $31 billion, and brands like Nike are already facing supply chain restructuring pressures. As the world's largest sneaker consumer market, the U.S. relies on imports for approximately 95% of its footwear products. The Trump administration increased tariffs on Vietnamese products to 46%, with Indonesia and Cambodia reaching 32% and 49% respectively. However, it subsequently announced a temporary suspension of implementation, causing enterprises to fall into a dilemma over decision-making.
Transnational corporations like Nike are facing difficult choices. Although Trump claimed that increasing tariffs would drive manufacturing back to the U.S., the reality is that the cost of producing athletic shoes in the U.S. is three to four times higher than in Asia. Apollo Global Management analysis shows that even if companies relocate their production lines back to the U.S., there is an 80% shortage of required labor, and the payback period for automation equipment investment exceeds seven years. Matt Priest, chairman of the American Footwear Distributors and Retailers Association, believes that consumers will pay $15 to $25 more per pair of sneakers, and the cash flow pressure on supply chain enterprises will increase by more than 40%.
American National Public Radio interviewed Patrick Song, who works in purchasing and development of sports brands in Portland, Oregon. He candidly admitted that his company finds it difficult to leave Southeast Asia's apparel supply chain. The U.S. has lacked a complete supply chain for decades, making it hard to find people willing to manufacture complex products domestically. When asked about the possibility of manufacturing returning, he bluntly said, "Would Americans want to do low-wage work like making shoes and bags? Even if factories were built, wage costs would erode profit margins."
Yahoo Finance believes that the impact of this trade dispute has transcended the economic sphere. Craig Radcliffe, managing director of Apollo's public policy division, admitted at a client meeting, "Only four countries worldwide can achieve large-scale production of athletic shoes; enterprises have no choice. It is unrealistic to bring supply chains back to the U.S.; perhaps we can just buy fewer shoes."
To cut costs, some sportswear brands may use cheaper materials. Additionally, upstream retailers cutting orders could lead to reduced product styles or shortages. When the summer back-to-school shopping season arrives, American teenage consumers will face price shocks.
China and Southeast Asia Support the "Nike Myth"
The U.S. is one of the world's largest textile importers, importing various textiles from different countries every year. Over 98% of clothing sold in the U.S. comes from imports. From the annual textile import data of American industry associations, it can be seen that in recent ten-plus years, the U.S. has become increasingly reliant on international supply chains to meet domestic market and industrial demand for textiles.
According to U.S. import data and U.S. textile import statistics, the total value of U.S. textile imports reached $107.72 billion in 2024, an increase of 2.66% compared to the previous year. Among them, China is the largest source of U.S. textile imports, followed by Vietnam. Apart from that, Bangladesh, Mexico, and India are also important sources of U.S. textiles.
The latest data disclosed by the U.S. textile importer database for 2024 shows that the top ten American retail giants, including Walmart and Amazon, completed a total of 3.3 million tons of textile imports. Based on an industry average unit price of $3,800 to $4,500 per ton, the annual total transaction amount ranges between $125.4 billion and $148.5 billion. Walmart tops the list with an annual import volume of 800,000 tons, Target ranks second with 500,000 tons, and Amazon ranks third with 450,000 tons. The main import sources for these top three enterprises are China, Vietnam, Bangladesh, and Indonesia.
According to Just Style, a U.S. apparel procurement and textile industry website, citing analysis by a professor of clothing research at the University of Delaware, data from the first half of 2024 shows that 33.2% of U.S. apparel imports come from China, higher than 32.8% in the same period last year. Vietnam accounts for 16.7% of total imports, also higher than 15.8% in the same period last year.
Tang Xiaotang, a footwear and apparel manufacturing observer and founder of No-Fashion Chinese Network, told the Global Times on the 10th that China and Southeast Asia are the most important footwear and apparel manufacturing bases in the world. "Nike" and others have basically transferred production to China and Southeast Asia under the tide of global industrial division of labor driven by efficiency, while the U.S. headquarters focuses on administrative management, strategic decision-making, and design and research functions. From this perspective, it is China and Southeast Asia that support the "business myth" of "Nike" and similar brands, enabling these brands to dominate the athletic footwear and apparel markets.
For example, in Vietnam, Huntsman Corporation's Huntsman Textile Effects has warehouses in Vietnam. In 2015, Avery Dennison's RBIS invested $30 million in a factory in Vietnam. The company provides label solutions for well-known brands such as Uniqlo, The North Face, Nike, and Adidas.
Currently, the U.S. is Vietnam's largest export market for textiles and garments. In 2023, Vietnam's total garment exports to the U.S. exceeded $17 billion. In 2024, Vietnam's textile and garment exports amounted to $44 billion, with more than 35% of the production capacity of brands like Nike and Lululemon concentrated in Vietnam.
It is understood that Nike began betting on Vietnam in 2019, and its production capacity share in Vietnam surged from 12% to 51%. In its latest annual report, Nike stated that half of its shoes and more than 25% of its apparel are produced in Vietnam. Its competitor, Adidas, relies on Vietnam for 39% of its footwear and 18% of its apparel production.
In addition, Vietnam is the second-largest supplier country for Deckers Brands, the parent company of UGG and Hoka, which owns 68 supply chain partners in Vietnam. VF Corporation, the American multinational apparel company owning The North Face, Timberland, and Vans, heavily relies on "Made in Vietnam." Currently, 17% of its suppliers are in Vietnam.
Thailand's total garment exports to the U.S. are smaller than Vietnam's but still show stable growth. U.S. investments in Thailand are relatively concentrated on high-end textiles, technical fabrics, such as sportswear and functional clothing. The president of the Thai Garment Manufacturers Association said that currently, Thailand has more than 800 garment enterprises with high production skills. Nike and other companies have expanded procurement in Thailand in recent years.
Even with Price Increases and Reduced Features, There Will Be No Return
An article on the Yahoo Finance website on September 9th wrote that American shoe companies like Under Armour once tried to set up "innovation labs" domestically, hoping to expand them into larger production centers, but the results were not ideal. "From a production standpoint, Americans are unwilling to do this kind of work," said Matt Priest. "In the U.S., such industries may only rely on robots." The report believes that the revival of the athletic shoe manufacturing industry will not occur in the U.S., but rather, the vast majority of athletic shoe production will remain in Asia.
Tang Xiaotang told the Global Times that today, American athletic shoe and apparel companies like Nike basically lack production capabilities domestically. Economic development to a certain extent means rising production costs, which requires profit-driven enterprises to constantly shift their industrial chains globally. "Many cases have shown that the U.S. and Europe are no longer suitable as production bases for daily consumer goods. Walmart once produced the cheapest athletic short sleeve in the U.S., but the price clearly exceeded the cost of Chinese products. The advantages of China and Southeast Asia in shoe and apparel production are unparalleled by the U.S., and the relocation of production to China and Southeast Asia by 'Nike' and similar brands is an irreversible process."
A Chinese cotton spinning industry insider told the Global Times that undoubtedly, China is the world's largest producer and exporter of textiles, apparel, and footwear. Domestic industrial chains are complete, and its position in the global supply chain is crucial. Apart from footwear, China's textile and apparel exports account for the highest proportion of global exports, reaching 38%, and in recent years, it has consistently accounted for more than one-third. Southeast Asia is an important market for China's textile and apparel exports, maintaining around 17% of market share in recent years. 60%-70% of Vietnam and Cambodia's fabrics are imported from China, making China's role in global industrial chain resource allocation irreplaceable.
Tang Xiaotang stated that the U.S. plans to impose a maximum equivalent tariff of nearly 50% on Southeast Asian countries, which has been temporarily suspended. This puts "Nike" and similar companies in a dilemma. On one hand, the profit margins for footwear and apparel products are not high, and consumers are increasingly sensitive to prices. Imposing tariffs means distributors or even consumers sharing the cost burden. However, this is difficult to achieve, and the likely outcome is that the consumer market will shrink after price increases, leading to an industry downturn. On the other hand, during an industry downturn, enterprises will be very cautious about investing and building factories in the U.S. The U.S. no longer has the environment for low-end manufacturing. It is unrealistic for a single enterprise to break away from the entire industrial ecosystem and build a factory in the U.S. A possible scenario is that even if the U.S. imposes high tariffs, enterprises would rather endure declining sales volumes or even losses in the short term instead of rashly building factories in the U.S.
The head of a shoe export company in Quanzhou, Fujian Province, told the Global Times that currently, flagship athletic shoes of some international brands often adopt high-performance midsole foams and structures. Some shoe models support their prices, which can reach several thousand RMB, with elements such as carbon plates and high-ventilation high-strength woven fabrics. Under the cost pressure brought by tariffs, companies may choose to "reduce features" to lower the technological content of products, not only affecting wearing comfort but also harming brand image through cost compression to gain profits. The current fierce competition in technology among international athletic products will ultimately affect the international market share of American brands.
Original Source: https://www.toutiao.com/article/7491986766468809251/
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