02-07-2025
Stock investors waver on U.S.-Vietnam trade deal
Is the trade deal with Vietnam announced Wednesday good news or bad news for U.S. companies? Stock investors may need more time to think.
The big picture: U.S. importers — from apparel to furniture to toys — took a hit in April when Trump threatened major new tariffs on the popular manufacturing hub. Today's deal eased tensions but left steep tariffs in place.
Follow the money: When Trump announced on social media Wednesday that he'd made a trade deal with Vietnam, shares in companies like Nike, Lululemon and Deckers Brands all jumped on the tease.
But 19 minutes later, when Trump announced some details of the agreement, shares in those Vietnam-exposed companies immediately reversed course, with many turning negative.
Most crept back up, to varying degrees, as investors began to parse implications for individual names.
The big picture: The initial reaction highlights the reality of the new calculus.
Trump's deal will place a 20% tariff rate on all Vietnam-made goods imported into the U.S., and a 40% rate on any goods coming from Vietnam that were originally shipped from someplace else.
That's bad news, considering importers from Vietnam have been paying a 10% placeholder tariff since Trump paused larger reciprocal rates in April. From that baseline, the new tariff rate is doubled.
On the other hand, Vietnamese products faced a larger 46% rate when the pause expired, which could have gone into effect as soon as next week.
By the numbers: Nike shares jumped Wednesday morning, turned negative, then recovered to close up 4.1%.
The deal news, combined with good vibes from the company's earnings report last week, has Nike shares trading above where they were on April 2, when the tariff news sent it plunging almost 15%.
Lululemon, another apparel manufacturer with significant Vietnam exposure, jumped, went negative, then closed up 0.5%. It remains down nearly 13% from April 2.
Deckers Brands' chart from Wednesday looks identical. It closed up 0.8% after initially jumping 3.5% on Trump's initial deal headline.
