Nike (NKE 2.87%) stock managed to post gains Friday despite another big sell-off for the broader market. The company’s share ended the day’s trading up 3%. The S&P 500 (^GSPC -5.97%), Nasdaq Composite (^IXIC -5.82%), and Dow Jones Industrial Average (^DJI -5.50%) fell 6%, 5.8%, and 5.5%, respectively.
Stocks sold off again today as investors assessed the unfolding outlook on tariffs, but Nike was able to close the day in the green thanks to what could be a key development on that front. President Trump said that he had a productive call on tariffs with Vietnam’s leaders, and investors are hoping that could open the door for the footwear and apparel giant to see mitigated headwinds.
Nike stock rises as Trump teases potential tariff deal with Vietnam
In a message posted to social media today, President Trump said that he had a “very productive call” with Vietnam’s General Secretary To Lam. According to Trump, Lam expressed interest in reaching a new trade agreement with the U.S. that would allow for tariffs on goods from his country to be reduced to zero. Nike has already shifted much of its production from China to Vietnam in response to trade and geopolitical issues, but the Trump administration’s new import-tax policies are threatening to undo benefits from the shift.
What’s next for Nike?
The tariff situation between the U.S. and Vietnam will likely continue to be a major valuation catalyst for Nike in the near term. According to the Trump administration, a 46% tariff on goods from Vietnam will go into effect on April 9. With Nike relying heavily on Vietnam as a base of manufacturing operations, its products could soon see substantial pricing increases that could dissuade consumer purchases.
Whether or not Vietnam will be able to reach a suitable new trade agreement with the U.S. has quickly become a key business performance and valuation catalyst for Nike.
Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Nike. The Motley Fool has a disclosure policy.