Gap(GPS) The Motley Fool·2025-04-04 19:55Core Viewpoint - Apparel retailers such as Deckers Outdoor, Gap, and Abercrombie & Fitch experienced significant stock price increases despite a broader market decline, attributed to President Trump's statements regarding tariffs on Vietnam [1][2]. Group 1: Market Reaction - Shares of Deckers Outdoor, Gap, and Abercrombie & Fitch rose by 4.3%, 6.3%, and 3% respectively, while the S&P 500 index fell by 5.5% [1]. - The rally in these apparel companies was linked to a midday post by President Trump concerning tariffs on Vietnam [2]. Group 2: Manufacturing and Tariff Impact - These retailers have a significant manufacturing presence in East Asia, particularly Vietnam [3]. - Deckers reported moving a substantial portion of its manufacturing from China to Vietnam due to U.S.-China trade tensions [4]. - Gap sources 27% of its purchases from Vietnam and 19% from Indonesia, while Abercrombie sources 35% from Vietnam and 22% from Cambodia [4]. Group 3: Tariff Announcement - Trump announced a 46% tariff on Vietnam, which was unexpected and perceived as a betrayal by companies that had relocated production in line with his previous policies [5][7]. - The 46% tariff was described as "reciprocal" to Vietnam's tariffs on U.S. goods, but the calculation included intangible trade practices [6]. Group 4: Potential Negotiations - Following the tariff announcement, Trump indicated a willingness to negotiate, suggesting that Vietnam might reduce its tariffs to zero if an agreement is reached [8]. - This statement was seen as a potential signal that the high tariffs may not be permanent and could be part of initial negotiations [8]. Group 5: Future Considerations - While the news was positive for Vietnam-sourced companies, caution is advised as other tariffs may remain, potentially increasing costs for consumers and affecting overall demand [9]. - The apparel sector may still face challenges in a stagflationary environment, impacting branded shoe and clothing sales [10].