Jin Shi Shu Ju·2025-07-04 08:07Core Viewpoint - The announcement of a trade agreement between the U.S. and Vietnam, which includes increased tariffs on imports from Vietnam, has led to a rise in stock prices for companies like Nike and Lululemon, but analysts warn of potential downward adjustments in earnings forecasts due to the new tariffs [2][3]. Group 1: Impact of Tariffs - The new agreement imposes a 20% tariff on goods imported from Vietnam and a 40% tariff on goods transshipped through Vietnam, compared to the previous 10% tariff [2]. - UBS analysts predict that earnings per share for covered apparel manufacturers and retailers will be adjusted downwards by an average of 3% to 5% for this year and next [3]. - Companies such as Victoria's Secret, Under Armour, and G-III Apparel Group are expected to be most affected, with potential earnings adjustments of 12% to 20% [3]. Group 2: Supply Chain Challenges - The difficulty of relocating manufacturing back to the U.S. is highlighted, as many companies are currently negotiating with suppliers to share the burden of the new tariffs [4]. - Analysts note that Vietnam is a crucial sourcing location for many apparel brands, with significant percentages of their products being manufactured there: On Holding (90%), Deckers Outdoor (75%), and Nike (42%) [4]. Group 3: Market Reactions and Sentiment - Despite the increase in tariffs, some analysts believe the market's initial concerns may have been overstated, as the new tariff rates are lower than previously feared [4]. - Possible reasons for the initial rise in apparel stocks include the market having already priced in higher tariffs, a belief that further tariff increases are unlikely, and the perception that the cost impact of tariffs can be managed [4].