Economist Peter Schiff warned Thursday that Nike Inc. (NYSE: NKE) will not move production to the United States despite the newly imposed prices, forecast for higher prices and the reduction in interior sales for the shoe giant.
What happened: “Nike will not build factories in the United States to make sneakers. This would add more costs than rates of 40%,” wrote Schiff on X. “The result will be less sneakers sold in the United States at much higher prices.”
When asked if Nike could absorb the tariff costs when building domestic factories, Schiff rejected the idea, suggesting that the company would rather redirect the products: “They will eventually sell more sneakers to consumers from other countries, because they buy what the Americans can no longer afford.”
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Comments arise as Nike shares fell 14.44% Thursday after the president Donald Trump Announced radical reciprocal prices affecting the company’s supply chain. Vietnam, where Nike produces almost 50% of its shoes, faces a price increase of 46%.
Nike’s revenues worldwide in the million US dollars in 2017 to 2024, by Region – Source: Statista
See also: How do billionaires pay less income tax than you? Tax postponement is their number one strategy.
Why it matters: Goldman Sachs has identified Nike among several retailers with a strong exposure to new prices, which include a rate of 34% for China and 32% for Indonesia, two key manufacturing locations for the company.
The wider market experienced significant disorders following the price announcement, with Wall Street losing about 2 billions of dollars in market value.
Discretionary consumption actions have been particularly affected, Nike competitors also undergoing substantial losses –Lululemon Athletica Inc. (Nasdaq: Lulu) fell 9.28% and Adidas Actions have decreased on its exposure to Vietnamese manufacturing at 39%.
Analysts warn that brands will have to adjust prices, negotiate with suppliers and optimize costs to protect margins. Wedbush Securities analyst Dan Ives Called the prices “worse than the worst case”, with a particular concern concerning the impact of the tariffs of China and Taiwan on the supply chains and the request.
Nike is lagging behind Lululemon, Columbia Sportswear (Nasdaq: colm), Under armor (NYSE: UAA), Skechers (Nyse: skx), VF Corp (NYSE: VFC), and In AG dress (NYSE: Onon), struggling with negative growth and momentum. The Benzinga Edge actions classification also indicates a downward price for Nike in short and long -term periods. Register to find out more.
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This article Peter Schiff says that Nike “ will not build factories ” in the United States, they will sell to countries like China: a much better strategy among the Trump prices originally appeared on benzinga.com
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