“Nike makes expensive shoes … it makes them at $ 18 …”: Deepak Shinoy weighs a mutual tariff

On Thursday, US President Donald Trump presented a “expansionary tariff” policy aimed at confronting countries that impose a high tariff on American goods. The effects of mutual tariffs, especially on the countries where American companies are making their products, were a discussion of experts.

Deepak Shenoy, founder and CEO of CapitalMind, presented a wise and distinctive perspective on the possible consequences, using NIKE as an example.

In a publication on X, Shenoy indicated that Nike produces upscale shoes, half of which were manufactured in Vietnam through a subsidiary that greatly reduces production costs compared to retail prices. The production in Vietnam has highlighted an additional aspect, as it costs $ 18 to manufacture a $ 115 shoe.

“Nike makes expensive shoes. It makes half of them in Vietnam, in a subsidiary that effectively costs them a small part of what they sell in these shoes. This is the business model – he owns the brand and marketing – and maintains manufacturing costs. His book X.

Shenoy noted that the 46 % definitions will lead to an increase of $ 9 to the current price of $ 115 for Nike Air Force 1, equivalent to an 8 % increase. This allows Nike to flexibility to raise the price to $ 124.

Yesterday, Shinoy warned that the implementation of mutual definitions could have a permanent negative impact on the global economy. He stressed the possibility that the Americans will bear the burden of these repercussions for a long time with the development of the situation.

“There is no need for revenge, frankly. Let the Americans pay for it for a while and see how to start,” X said in X.

Xinoy described the customs tariff strategy as “a very aggressive approach by the United States,” noting that the possible market turmoil in the near future.

“I assume it is not crazy that all central banks impose the US dollar and move to euro or JPY bonds for reserves. There is no point in using the US dollar as a currency anymore because it will not be imported from you useful. Things will change slowly but definitely.”

How can the definitions be struck

The shares of Nike and Apparel fell on Thursday after President Donald Trump announced a new tariff on Vietnam and other critical production centers. On Wednesday, the United States carried out a 46 % mutual tariff for goods from Vietnam, as part of the increasing trade conflict that President Trump started. In addition, a new tariff was imposed by 49 % on Cambodia, 34 % on China, and 32 % on Indonesia.

Over the past decade, Nike Inc. has invested. And Adidas AG intensively in Vietnam. According to organizational stadiums, nearly half of all Nike and 39 % of Adidas shoes are now manufactured. Vietnam has become the main supplier of shoes for these companies, as it achieved more than $ 20 billion in annual revenue.

NIKE witnessed a 7.3 % decrease in the stock price during the trading hours at 6 pm New York time. LululeMon Athletica Inc. , The production of 40 % of its products in Vietnam and 17 % in Cambodia, a significant decrease of approximately 11 % in late trading. On the contrary, Abercrombie & Fitch Co. The sources of 35 % of its goods from Vietnam and 22 % of Cambodia, quickly recovered after an initial decrease by approximately 8 %. GAP Inc. A decrease of up to 11 %, due to the fact that about 27 % of its goods come from Vietnamese factories and 19 % of Indonesia.

According to a New York Post report, the introduction of a new tariff on April 9 can add an additional $ 18 to the current price of $ 180 of Nike Jordan 1 high shoes.

Likewise, other famous Nike shoes may see an increase in prices ranging from $ 15 to $ 35. According to UBS, consumers can expect 10 % to 12 % in the price of goods arising from Vietnam.

For example, Nike Sports Shoe has $ 115, such as Nike Air Force 1, at a cost of production of about $ 18 at a factory abroad. With a 46 % tariff imposed on products from Vietnam, an additional $ 8.28 will incur per pair. This cumulative cost becomes large when doubled by the amount of sports shoes that can be charged in a container, which is usually about 8,000 pairs.