Source: Supply Chain Dive
Date: 13th March 2025

Though the region isn’t as large of a sourcing hub as China, experts say duties on Vietnam would create headwinds for footwear and apparel companies.

As an industry that relies heavily on imported goods, fashion stakeholders are prepping for a wave of proposed and potential tariffs on the countries from which it sources.

The new U.S. President has proposed various tariff policies that would impact the fashion industry’s bottom line, and companies are responding accordingly.

Though China is still the top sourcing country for the industry, “We’re all kind of nervous about Vietnam,” said the senior vice president for Lot Sixteen, a Washington, D.C.-based lobbying and communications firm.

Lot Sixteen spoke at the American Apparel and Footwear Association’s executive summit about trade policy within the first 100 days of Trump’s second term.

Vietnam is the second largest apparel and footwear supplier behind China, and increased U.S. tariffs could become a large headwind.

“What we just saw…with very high tariffs on two of our closest trading partners, Canada and Mexico, who have a longstanding trade agreement with us, unfortunately shows that it doesn’t feel safe wherever you go right now,” the Lot Sixteen said.

In recent years, Vietnam has become one of the key sources for the apparel and footwear industry, and in response, the country has improved its infrastructure with roads, railroads and ports to service the factories, said the senior equity analyst for Morningstar Research Services.

Wages in Vietnam are lower than in China, and some China-based manufacturers have opened factories in the country, Morningstar Research Services said.

Had Trump won reelection in 2020, Lot Sixteen said it was likely the president would have applied tariffs on Vietnam along the lines of those applied to China at the time. Now it remains to be seen whether the administration will take the reciprocal tariff approach to the country or apply the duties another way.

“However they do it,” Lot Sixteen said, “I feel very confident that they’re looking at Vietnam.”

While fashion companies have diversified their supply chains away from China, many have turned to Vietnam as a key sourcing location, including Nike and On.

Fashion companies may be looking elsewhere in Southeast Asia or the Americas for further differentiated sourcing options, Lot Sixteen said. “But at the end of the day, who’s safe?”

Lot Sixteen isn’t alone in sounding the alarm for the fashion industry about the potential impact of tariffs on Vietnam.