Nike Cuts Reliance on China Production to Mitigate Tariff Impact

Strategic Insights -

Nike's shares rose 15 percent as the sportswear giant announced plans to reduce its production in China for the US market, aiming to minimize the impact of US tariffs on imports. The company forecast a smaller-than-expected drop in first-quarter revenue, with a mid-single-digit decline compared to analysts' expectations of a 7.3 percent drop. Nike's Chief Financial Officer, Matthew Friend, said the company aims to cut its reliance on Chinese production to a "high single-digit percentage range" by the end of May 2026, as it reallocates production to other countries.

Key Takeaways:

  • Nike plans to cut its production in China for the US market to mitigate the impact of US tariffs, with the goal of reducing its reliance on Chinese production to a "high single-digit percentage range" by the end of May 2026.
  • The company forecast a mid-single-digit decline in first-quarter revenue, slightly better than analysts' expectations of a 7.3 percent drop.
  • Nike's fourth-quarter sales fell 12 percent to $11.10bn, but still beat estimates of a 14.9 percent drop to $10.72bn.
  • The company aims to optimize its sourcing mix and allocate production differently across countries to mitigate the new cost headwind into the US.
  • Nike will "evaluate" corporate cost reductions to deal with the tariff impact and has already announced price increases for some products in the US.
  • The tariff impact is significant, but Nike's executives believe others in the sportswear industry will also raise prices, so Nike may not lose much share in the US.

Statistics:

  • Nike's shares rose 15 percent at the opening bell on Friday morning.
  • The company aims to reduce its reliance on Chinese production to a "high single-digit percentage range" by the end of May 2026.
  • Nike's fourth-quarter sales fell 12 percent to $11.10bn.
  • The company forecast a mid-single-digit decline in first-quarter revenue.
  • US President Donald Trump's tariffs on imports from key trading partners could add about $1bn to Nike's costs.
  • China accounts for about 16 percent of the shoes Nike imports into the US.

Sources:

  • "What do we know about the US-China trade deal?" (https://www.aljazeera.com/economy/2025/6/11/what-do-we-know-about-the-us-china-trade-deal)
  • "Largest US retailer Walmart warns of price hikes because of tariffs" (https://www.aljazeera.com/economy/2025/5/15/largest-us-retailer-walmart-warns-of-price-hikes-because-of-tariffs)
  • "Target cuts annual forecast as tariffs, boycotts weigh on sales" (https://www.aljazeera.com/economy/2025/5/21/target-cuts-annual-forecast-as-tariffs-boycotts-weigh-on-sales)