Nike Projects One Billion Dollars in Tariff Costs
(MENAFN) US-based sportswear giant Nike has announced it foresees an added USD1 billion in expenses due to tariffs enacted during the Trump-era trade policies, as the firm aims to move its production lines out of China.
“These tariffs represent a new and meaningful cost headwind,” stated Matthew Friend, Nike’s chief financial officer, on Thursday during the firm’s earnings presentation.
“With the new tariff rates in place today, we estimate a gross incremental cost increase to Nike of approximately $1 billion. We intend to fully mitigate the impact of these headwinds over time,” he continued.
In the previous year, close to 60 percent of all Nike-branded garments were manufactured in Vietnam, China, and Cambodia, while 95 percent of the company’s shoes came from Vietnam, Indonesia, and China.
Friend emphasized that although China “remains important to our global source base,” the corporation is targeting a reduction in the proportion of footwear shipped to the US from China—from roughly 16 percent down to the “high-single-digit range by the end of fiscal 2026,” while increasing reliance on alternative sourcing nations.
He further mentioned plans to roll out a “surgical price increase” in the US this autumn and to implement “corporate cost reduction” strategies to streamline operations.
Nike experienced a sharp decline in fourth-quarter net profit, dropping 86 percent to USD211 million, due to the effects of tariffs and sluggish consumer demand.
This represents the firm’s weakest quarterly profit in over three years, with total revenue falling 12 percent to USD11.1 billion.
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