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Tariffs

Nike Seeks to Mitigate US Tariffs on Imports, Shifts Production to Other Countries

Strategic Insights

— 2 min read

Nike is taking steps to mitigate the impact of US tariffs on imports from China, aiming to reduce its reliance on production in China to a "high single-digit percentage range" by end-May 2026. The company is shifting production to other countries to offset the potential cost increase of around $1 billion due to the tariffs. Despite a smaller-than-expected drop in first-quarter revenue, executives expressed concerns about the ongoing tariff dispute between the US and China. Nike's executives said they are focused on cutting the financial pain and evaluating corporate cost reductions to deal with the tariff impact.

Key Takeaways:

  • Nike aims to reduce its reliance on production in China to a "high single-digit percentage range" by end-May 2026, shifting production to other countries.
  • The company forecasts a smaller-than-expected drop in first-quarter revenue, with a mid-single-digit decline in sales.
  • Nike's CFO Matthew Friend mentioned that China accounts for about 16 percent of the shoes Nike imports into the United States, and the company is working to reduce this figure.
  • The company has already announced price increases for some products in the US and will "evaluate" corporate cost reductions to deal with the tariff impact.
  • Nike's running segment shows signs of recovery, with the category returning to growth in the fourth quarter after several quarters of weakness.
  • The company invested heavily in running shoes such as Pegasus and Vomero, and marketing spending was up 15 percent year-on-year in the quarter.

Statistics:

  • Nike forecasts a first-quarter revenue drop in the mid-single digits, which is slightly better than analysts' expectations of a 7.3-percent drop.
  • The company's fourth-quarter sales fell 12 percent to $11.1 billion, but still beat estimates of a 14.9-percent drop to $10.72 billion.
  • The US President Donald Trump's sweeping tariffs on imports from China could add around $1 billion to Nike's costs.
  • Marketing spending was up 15 percent year-on-year in the quarter.
  • The running category returned to growth in the fourth quarter after several quarters of weakness.

Sources:

  • "Nike said it would cut its reliance on production in China to mitigate the impact from US tariffs on imports." (Source: Unspecified article, no date or publication date provided)
  • "China is subject to the biggest tariff increases imposed by Trump, CFO Matthew Friend said." (Source: Unspecified article, no date or publication date provided)
  • "The company forecasts a smaller-than-expected drop in first-quarter revenue, sending its shares up 11 percent in extended trading." (Source: CNBC, no date or publication date provided)
  • "David Swartz, analyst at Morningstar Research, said 'The tariff impact is significant. However, I expect others in the sportswear industry will also raise prices, so Nike may not lose much share in the US.'" (Source: Morningstar Research, no date or publication date provided)
  • "Monique Pollard, Citi analyst, said 'Running has performed especially strongly for Nike, and new running shoes and sportswear products are expected to offset declines in Nike's classic sneaker franchises at wholesale partner stores.'" (Source: Citi Research, no date or publication date provided)

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