American athletic footwear and apparel corporation Nike has said it anticipates an additional USD1 billion in costs due to tariffs imposed under the US’ Trump administration, as the company seeks to shift production away from China.
“These tariffs represent a new and meaningful cost headwind,” Matthew Friend, Nike’s chief financial officer, said Thursday during the company’s earning briefing.
“With the new tariff rates in place today, we estimate a gross incremental cost increase to Nike of approximately USD1 billion. We intend to fully mitigate the impact of these headwinds over time,” he added.
Last year, nearly 60 percent of all Nike-branded apparel was produced in Vietnam, China, and Cambodia, while Vietnam, Indonesia, and China accounted for 95 percent of Nike’s footwear manufacturing.
He noted that while China “remains important to our global source base,” the company plans to reduce footwear imports to the US from around 16 percent to the “high-single-digit range by the end of fiscal 2026,” instead sourcing more from other countries.
Friend added that the company plans to introduce a “surgical price increase” in the US starting this fall and intends to cut expenses through “corporate cost reduction” measures.
Nike’s net income for the fourth quarter plunged 86 percent to USD211 million amid tariff impacts and weaker consumer spending, marking its worst quarterly earnings in more than three years with revenues down 12 percent to USD11.1 billion.
