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US sports apparel firm mulls ditching China for Vietnam

Brooks Running Company shoes displayed at a supermarket in Kang, Malaysia.
Brooks Running Company shoes displayed at a supermarket in Kang, Malaysia.

U.S. sports apparel company Brooks Running is considering shifting its manufacturing operations from China to Vietnam to avoid trade war tariffs.
The firm’s CEO Jim Weber said Monday that the impact of President Donald Trump’s trade war with China is going to put a 45-percent tariff on his company’s running shoes.

“We’re preparing for a 25 percent tariff on our business and that’s on top of 20 percent already on running shoes. It’s really going to be upsetting for us,” Weber told the CNBC’s TV program “Squawk Box.”

Vietnam will be a “possible” new supply chain for Brooks, Weber said, adding that the transition will likely cost “millions” of dollars.

Weber said he was confident that the move will allow his company to be more competitive in the U.S. and in the world as the tariffs are lower in Vietnam.

He added that the transition, if it happened, would likely to be permanent.

The U.S.-China trade war escalated last month as the U.S. levied new tariffs of 10 percent on about $200 billion worth of Chinese products, with the tariffs to go up to 25 percent by the end of this year.

China retaliated immediately with 5 and 10 percent tariffs on $60 billion worth of U.S. products.

The announcement by Brooks, which sells sports footwear, apparel, bras and accessories in 50 countries worldwide, came after Adidas CEO Kasper Rorsted said in May that his company is shifting footwear sourcing from China to Vietnam.

Vietnam has in fact overtaken China as Adidas’ top supplier, with Vietnamese factories producing 44 percent of its shoes by volume last year against 19 percent by Chinese manufacturers, according to the company’s data.

This is also true of Adidas’rival Nike, which had 46 percent of its footwear made in Vietnam last year, against 27 percent in China.

Vietnam’s footwear exporters seem to be benefiting from the ongoing trade war.

In the first nine months this year, Vietnam’s footwear exports were worth $11.74 billion, a 10.2 percent year-on-year increase.

Vietnam is the second biggest exporter of footwear to the U.S. behind China, shipping 404 million pairs of shoes last year.

Last year, Vietnam’s footwear exports were worth $14.65 billion.