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In May 2015, President Barack Obama made a big speech about refusing trading barriers with other peoples. He delivered it to the sunny day Nike in Oregon’s World Headquarters.
“Sometimes, when we talk about trade, we think of Nike,” Obama said before making his step for a trade transaction with the Asian countries, which he called “the highest standard and progressive trading transaction”.
President Donald Trump has canceled the transaction known as the Trans-Pacific partnership in less than two years.
Now, as Trump erects more trading barriers in his second administration, Nike is again a central stage in conversations about globalization, a familiar place for a company that has its roots that import Japanese track boots and Briefly made sneakers in the US.
Last month Trump proclaimed the rhizomal tariffs What would immerse imports from countries where most sneakers and nike clothes are produced. Careful look at a massive Nik supply chain Vulnerable factory workers Could squeeze.
Some degree of taxation of imports has long become a feature of international clothing trade, and Nike has decades of navigation experience at these tariffs. The company did not talk about how it would handle the current round at Trump, but this is among the 76 companies that signed letter Last week, the president warned of the grave consequences for shoe companies unless there is a tariff relief.
In response to questions about how tariffs could affect factory workers, Nike said in a statement that he “strives for ethical and responsible production.”
“We are building long-term relationships with contracting suppliers because we know that trust and mutual respect support our ability to create products more responsibly, accelerate innovation and better serve consumers,” the statement said.
Where Nike does sneakers and clothes?
Nike does not own or manages foreign factories that produce their products. Instead, it works with 532 contracts that operate nearly 1.2 million workers, reports Internet Cava Nike.
No country is more important for Nike production than in Vietnam, where the brand works with 131 factories with almost 460,000 workers. According to the company in Vietnam, half the Nike sneakers were made in Vietnam, the company reports Annual report.
The second largest production base of Nike-Indonesia, where more than 280,000 workers work in 45 contract plants.
Over the last decade, the company has been moving production from China. It works with 120 Chinese contract plants operating more than 100,000 workers compared to more than 350,000 workers in 2012. Some of the shoes and clothes that Nike does in China are sold to Chinese consumers and therefore is not subject to tariff.
Do the Nike tariffs affect?
Yes. On April 2, Trump announced the “mutual” tariffs that included 46% in Vietnam, 32% in Indonesia and 34% in China. Next trading day, Nike’s shares fell on 14%Destroying $ 14 billion.
A week later, the president focused on most tariffs for 90 days, but 145% of the import tariff from China and 10% supplement for most imports from other countries remain in place.
Tom Nikic, an analyst of the Needham & Co. veterans, estimated that the tariffs, if it is fully implemented, almost destroy the Nike’s profit if the company has not made changes to its current prices and production.
“In my math, their profits will decrease by about 95%,” he said in an email.
Will there be Nike Screeze factories for the best deals?
“Almost certainly,” said Jason Jud, Executive Director of the Global Institute of Labor at Cornela University. “Default for a brand or seller who has encountered a tariff or other shock is pressing suppliers for discounts.”
“Shock is a good example,” Jud added. “We know from a conversation with suppliers that the noisy shock meant abolished orders and negotiations from the cost.”
Consortium on the rights of workers, group monitoring group, settlement brands canceled 40 billion orders During the pandemic.
When Trump announced tariffs during his first administration, the Nike top heads said they would find saving in their supply chain.
“We have a lot of leverage we can work with, from searching for other leverage,” Nike Chief Financial Director said in 2019.
How will tariffs affect Nike factory workers?
Factory workers probably feel influenced directly.
Darah O’Rurka, Associate Professor of California University Berkeley, who studied wages at Nike factories, said the tariffs could become a “big hammer”.
“It is likely that you will see such pressure from the executives to tell the employees:” We will have to work more and longer for a certain time, “he said.” Keep the line or you will lose work. “
This may mean that workers are asked to make more sneakers and T -shirts in each shift and work longer, according to ThuSi Narayanasamy, the director of the international propaganda for the work of workers.
It is likely that you will see such pressure from the executives to say to the workers: “We will have to work more and longer for a certain time.”
—Dar O’RURK, Associate Professor of California University, Berkeley
“When suppliers are squeezed out and workers have unjustified production goals, they do not drink water, do not break on food,” she said in an e -mail. She added that in these circumstances, the organization invariably hears “women who have urinary tract infections, fighting recurreting bodily deformations, kidney stones and back problems with fast, repetitive movements more than 12 hours.”
Najojas said that brands such as Nike have a choice: “Click the costs they can intelligently absorb their suppliers, with the knowledge that it is immediately damaged by millions of factory workers or not.”
In his statement Nike said Code of conduct and Leadership Code.
Foreign clothing workers may also face differences or work without payment, Kornell Jad said. It happened across the field during a pandemic.
In 2021, a consortium on the rights of workers identified 31 clothes – three of which worked for Nike – what the consortium said did not pay 39.8 million dollars in payments 37 637 workers who lost work during a pandemic were borrowed.
Earlier, Nike challenged that he had borrowed the employees at three factories in the work group report. In his statement, Nike also stated that the factories were responsible for the benefit of the exit.
“Production providers carry financial obligations to pay the exit of workers, social insurance and other division affected by employees in accordance with local law and Nike’s Code of conduct“,” said the company.
Will tariffs force Nike to move back to the US?
“Think that this will return jobs in the US, badly thought out, it would be the most pleasant thing I could say,” O’Rurka Berkeley said.
Shoes and production of clothing remain laborious. Sneakers require bonding and sewing. T -shirts require sewing. Efforts to automate shoe production Mostly splashing.
This is part of the reason that Nike produces most of its products in low salaries. Propublica reports this month At a former Nike factory in Cambodia, where most employees earned a minimum wage – About $ 1 per hour.
Credit:
Sarabeta Mani/Price
Nike also uses huge factories filled with equipment that is difficult to transfer to a new place. They are often located near the companies that make the hats, nylons and polyesters needed to make the sneakers.
“The full production system is not easily mobile,” O’Rourg said.
Instead of moving back to the United States, industry observers expect clothing companies to continue producing products in low wages, but production will move on to less heavy tariffs.
This can even more harm to workers in Vietnam, Indonesia, China and other countries with relatively high offered tariff rates and a large number of Nike jobs. For example, in Indonesia, one union is waiting for as many as 50,000 workers can lose work If full tariffs on Trump will come into force.
As the number of people looking for work increases, wages in these countries will decrease.
“The line at the gate to find a job is getting bigger,” Jud said. “And this means that employers of any kind can start paying new workers less because unemployment has jumped.”
What can tariffs mean nike prices?
The estimates vary and depend on how much Nike costs convey to consumers.
If a 46% tariff on Vietnam will come into force, the price of $ 155 made in Vietnam will increase to $ 220, shoe distributors and America’s sellers, a trading group that considers Nike members.
An example, which is not characteristic of Nike, suggests that the imported company transmits virtually all tariff costs to customers. No brand of sports shoes gave specifics though Last week CEO Adidas Bjørn Gulden said “Higher tariffs will eventually lead to increasing prices.”
But Nike was in the decline and reduced many sneakers to increase sales.
It is possible that Nike absorbs more tariff costs to avoid raising prices too sharply.
“Nike will probably be difficult to raise prices,” the UBS investment bank recently wrote.
