Bilal Abou-Diab, CFA

Bilal Abou-Diab, CFA · 2025-04-04T15:45:01.184Z

Tariffs, Nike, and the Cost of a Policy Shift: The latest round of U.S. tariffs makes one thing clear: anyone buying foreign-made goods in the U.S. will now be paying a much higher price. There are only two possible outcomes. Either: 1. Consumers pay more for the same products—this is inflation. 2. Companies eat the cost—this means lower corporate earnings. Most likely, it’s a mix of both. Inflation makes everyday goods less affordable, especially for households already struggling. And lower earnings hurt companies that rely on specialized or lower-cost production abroad. Take Nike as a case in point. Nike operates over 155 factories in Vietnam, primarily around Ho Chi Minh City, employing over 500,000 people. That model is now under threat. With a 46% tariff on goods from Vietnam, “Made in Vietnam” just became dramatically more expensive in the U.S. Either Nike raises prices, or its bottom line suffers—or both. And unless Americans are ready to take on the labor conditions and wages of Vietnam’s manufacturing workforce (which is unlikely), the only alternative might be reshoring with heavy investment in robotics. Is this really about bringing jobs back—or shifting how production works altogether? A thought-provoking piece on Tarrifs specifically highlighting the experience in South East Asia by Adam Tooze here: https://lnkd.in/dprRBjRq