Nike, Lululemon, and More Retail Stocks Rise on Vietnam Trade Deal

Pedestrians walk past a Lululemon retail store. The retailer’s stock is up on news of a trade deal with Vietnam. Photo: Cheng Xin/Getty Images

Retail stocks with heavy exposure to Vietnam were rising Wednesday after President Donald Trump announced a trade deal with Vietnam that would lower tariffs on goods imported to the U.S. from there to 20% from the 46% announced back in April.

The biggest movers were apparel and furniture sellers that manufacture their goods in Vietnam, such as On Holding, Nike, Wayfair, Williams-Sonoma, and The Lovesac Co. As much as 90% of On’s footwear was made in Vietnam, the company said; Nike produced half of its shoes in the country in fiscal 2024.

While the SPDR S&P Retail ETF rose just 0.5% on the news, On Holding and Nike both rose more than 3%, Lululemon was up 0.6%, and Wayfair jumped more than 7%.

Other retail stocks were mixed, with Best Buy up 0.2% and Walmart down 0.7%. Lululemon and Crocs trended higher throughout the session, but had pared back gains in the afternoon session, down 0.5% and 0.9%, respectively. Vietnam accounted for 40% or more of the products sold by both companies.

“If a reciprocal tariff remains in place relative to Vietnam, that’s a huge amount of production for us and everybody else,” said Andrew Rees, Crocs’ CEO in a May earnings call with investors. “That would be incredibly hard to mitigate.”

Trump’s tariffs on goods from Vietnam were among the highest announced on his “Liberation Day” in April, but Wall Street expected rates would come down as the administration continued to negotiate with Vietnamese officials. The 20% rate is roughly in line with what many analysts had projected, which was fueling Wednesday’s rally.

That said, there is one caveat that might be capping investor enthusiasm. Trump’s Truth Social post noted that a 40% tariff would be applied to “transshipping” from Vietnam, referring to the practice of shipping goods through an intermediate country before sending them to their final destination. It’s a common practice across global supply chains to enhance efficiency.

The administration has criticized Chinese manufacturers for evading duties by making products in China and rerouting them through Vietnam. The new 40% tariff could help curb the practice. But for retailers and logistics companies, it raises the question of what products would fall under the higher rate.

Lacking any further clarification, Trump’s post could suggest that any product made elsewhere that passes through Vietnam—regardless of country of origin—could now be subject to a 40% tariff rate. It also creates ambiguity over how products manufactured in Vietnam with Chinese parts should be tariffed.

The White House didn’t immediately respond to Barron’s request for clarification on the trade deal.

Trump placed the so-called reciprocal tariffs on a 90-day hold following market backlash in April, pending trade negotiations. With that new deadline approaching next Wednesday, the pressure is on the administration to make and announce more deals.

Some countries may get more time, however. Treasury Secretary Scott Bessent said back in June that the U.S. would “roll the date forward to continue good faith negotiations.”

Write to Anita Hamilton at anita.hamilton@barrons.com