Nike warns Trump’s tariffs will cost it $1 billion—and customers will pay the price
The sportswear brand has been suffering from declining sales for some time, and its supply chain will be hit hard by new import taxes.
Just when the economic outlook appeared to be brightening a little for Nike, it will soon be facing a fresh challenge. In May, the sportswear brand reported a 10% drop in annual revenue during the past fiscal year, and fourth quarter revenue saw a 12% drop compared to 2023.
Consumer spending has remained flat across the board for over a year - but particularly in China, where sales are forecast to fall even further when President Donald Trumps tariffs kick in.
The tariffs which the US and China have set on imported goods
Trump announced additional 10% tariffs on all Chinese imports back in March. China responded by imposing even tougher measures, with tariffs on US imports hiked to 34%, 84% then 125%. They have shot up and back down over the past four months with the US rate now at 51% and China’s at 33%.
That presents quite a bleak outlook for Nike - not just in terms of sales (China accounted for about 17% of the company’s global revenue in 2024), but also because the Asian country is where most of Nike’s goods are manufactured. Around 36% of Nike’s sports shoes are produced in China, so Trump’s tariffs are going to have a double whammy effect. The sportswear giant plans to reduce its reliance on its manufacturing locations in China.
Nike forecasts Trump’s tariffs will add $1 billion to their annual costs - and as always, those expenses will be passed on to the consumer, which means goods will be more expensive to buy.
“We regularly evaluate our business and make pricing adjustments as part of our seasonal planning,” Nike said in a statement in May, head of new prices rises on goods from June 1, with some top-end products hiked by $10 or more.
Nike seeking ways of reducing overheads
Nike’s finance chief Matt Friend explained: “These tariffs represent a new and meaningful cost headwind. With the new tariff rates in place today, we estimate a gross incremental cost increase to Nike of approximately $1 billion.
“We have strong relationships with our factory partners, and our leadership team is experienced in managing through disruption,” he added. “Nike has consistently been a top payer of US duties. We will optimize our sourcing mix and allocate production differently across countries to mitigate the new cost headwind into the United States.”
Friend confirmed that more price increases were likely in the US this fall,although the company is looking at how it can reduce the new overheads through “corporate cost reduction”.
Whatever happens when Trump and President Xi next head to negotiating table in to resume trade talks, it’s almost certain that those Nike Air Force 1s you were planning on buying will be more expensive than they were this time last year.
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