US President Donald Trump recently announced an assertive “reciprocal tariff” policy, aiming to counter nations that impose high import duties on American goods. While the move has stirred global economic conversations, its immediate implications are already being felt—particularly in industries that rely heavily on international manufacturing, such as footwear and apparel. One of the most insightful voices on the matter has been Deepak Shenoy, founder and CEO of CapitalMind, who broke down the impact of these tariffs using Nike as a case in point.
In a post on X (formerly Twitter), Shenoy highlighted the stark contrast between Nike’s production costs and retail prices. He pointed out that Nike manufactures approximately half of its shoes in Vietnam, where each pair costs about $18 to produce. However, these same shoes are later sold in the US for around $115. Shenoy emphasized that Nike’s real strength lies not in manufacturing, but in its branding, marketing, R&D, and distribution—all of which are predominantly based in the United States. He described the Vietnam production as merely a “sidebar” in the larger business model, where the brand leverages low manufacturing costs while charging premium prices.
Shenoy explained that even with a steep 46% tariff on goods coming from Vietnam, the cost impact per shoe would be relatively minor—just an additional $8.28 on that $18 production cost. In retail terms, this could translate to a final price of around $124 instead of $115, representing a manageable 8% increase. With ample profit margins already built into Nike’s pricing structure, the company could absorb or pass on the cost without much disruption. However, Shenoy cautioned that while companies like Nike might survive the tariff wave, it is the American consumer who will likely bear the brunt of it in the form of higher prices.
In a follow-up post, Shenoy warned that the long-term effects of reciprocal tariffs could extend far beyond sneakers. He speculated that such aggressive trade policies might prompt central banks to reconsider the US dollar as the global reserve currency. “There isn’t even a need for retaliation,” he said. “Let Americans pay for this for a while and see how it pans out.” He even raised the possibility that countries could begin shifting their reserves toward euro bonds or the Japanese yen, diminishing the dollar’s dominance if the US continues limiting imports through high tariffs.
The market has already started reacting. Following the announcement of the 46% tariff on Vietnamese imports, Nike’s stock fell by 7.3% during after-hours trading. Other apparel giants also took hits. Lululemon Athletica, which sources 40% of its products from Vietnam and 17% from Cambodia, saw an 11% decline. Gap Inc., with 27% of its products coming from Vietnam and 19% from Indonesia, dropped as much as 11%. Abercrombie & Fitch, despite sourcing 35% from Vietnam and 22% from Cambodia, managed a quick rebound after an initial dip. Clearly, investors are jittery about what these tariffs mean for companies that rely on low-cost production hubs in Southeast Asia.
According to a report by the New York Post, the new tariffs could add up to $18 to the cost of a $180 pair of Nike’s Air Jordan 1 High sneakers. UBS estimates suggest that retail prices for Vietnamese-manufactured goods may rise between 10% and 12% across the board. That means customers could soon be paying $130 to $150 for shoes that previously cost $115. With around 8,000 pairs of shoes typically shipped in a single container, the cumulative increase in import costs becomes massive—both for brands and ultimately, for consumers.
In essence, what seems like a political move to protect American industries could end up becoming a global boomerang. While the tariffs may pressure foreign manufacturers, they are also likely to inflate consumer prices at home, disrupt global trade flows, and destabilize investor confidence. As Shenoy aptly put it, these decisions may “slowly but surely” change the very structure of international trade and currency reserves. For now, as shoppers brace for costlier sneakers, it’s clear that the soles of international trade are feeling the heat.
