Nike ($NKE) shares plunged over 14% in a single day, hitting their lowest price since 2017 after the U.S. imposed a 46% tariff on footwear imports from Vietnam—a major manufacturing hub for the company. With over 530,000 employees in Vietnam, Nike now faces skyrocketing production costs, supply chain disruptions, and potential profit margin erosion. 

Why Is Nike Crashing?

The dramatic sell-off follows the U.S. government's decision to impose a 46% tariff on footwear imports from Vietnam, where Nike employs over 530,000 workers. Vietnam is a critical manufacturing hub for Nike, accounting for a significant portion of its global supply chain.

Key Factors Driving the Decline:

• Tariff Impact: A 46% tariff drastically increases production costs, squeezing profit margins.

• Supply Chain Disruption: Nike relies heavily on Vietnamese factories; higher costs may force price hikes or reduced earnings.

• Investor Panic: The sudden tariff announcement triggered a massive sell-off, reflecting fears of long-term damage to profitability.

A "Nightmare Situation" for Nike

This development presents a worst-case scenario for Nike. The company already faces challenges from inflation, slowing consumer demand, and competition. The new tariffs could force Nike to:

• Raise prices: risking lower sales.

• Shift production:which is costly and time-consuming.

• Absorb costs: hurting earnings and shareholder returns.

• Analysts will closely monitor Nike’s response—whether it negotiates tariff relief, accelerates factory relocations, or revises financial guidance. For now, the stock remains under severe pressure, with potential further downside if the tariff situation worsens.

Disclaimer:The information provided in this article is for educational and informational purposes only and should not be construed as financial advice. The stock market is volatile, and investors should conduct their own research or consult a financial advisor before making any investment decisions. The author and publisher are not responsible for any financial losses incurred based on the content of this article.