Nike Warns of $1 Billion Tariff Costs as It Shifts Production Away from China

Strategic Insights -

Nike's Chief Financial Officer Matthew Friend warned investors on Thursday that the company could lose around $1 billion due to tariffs imposed by President Donald Trump. The company is shifting its production away from China, where it imports about 16 percent of its footwear into the U.S. Nike plans to make "surgical" price increases in the fall to mitigate the cost headwind. The sports giant also announced price hikes for adult apparel and equipment, ranging from $2 to $10, effective June 1.

Key Takeaways:

  • Nike expects to lose around $1 billion due to tariffs imposed by President Trump, with a significant portion of the cost attributed to China.
  • The company plans to shift its production away from China, where it imports about 16 percent of its footwear into the U.S.
  • Nike will make "surgical" price increases in the fall to mitigate the cost headwind, with prices rising for adult apparel and equipment.
  • Children's products, Nike Air Force 1s, and Jordan products will not be subject to the price increase.
  • Nike reported a quarterly profit of $211 million, or 14 cents per share, and revenue totaled $11.1 billion.
  • The company was among 76 companies that signed a letter to Trump in April asking for a footwear exemption from reciprocal tariffs.
  • Trump and his Commerce Secretary Howard Lutnick announced on Thursday that the U.S. and China have signed an agreement on trade, but provided no details.

Statistics:

  • Nike expects to lose around $1 billion due to tariffs imposed by President Trump.
  • The company plans to shift 16 percent of its footwear production away from China.
  • Price increases for adult apparel and equipment will range from $2 to $10.
  • The price of children's products, Nike Air Force 1s, and Jordan products will not rise.
  • Nike's quarterly profit totaled $211 million.
  • Revenue totaled $11.1 billion.
  • The company is among 76 companies that signed a letter to Trump in April asking for a footwear exemption from reciprocal tariffs.

Sources:

  • Bloomberg, "Nike Warns of $1 Billion Hit from Tariffs as It Shifts Production"
  • Reuters, "Nike reports quarterly profit that beats Wall Street estimates"
  • CNBC, "Nike raises prices on some apparel, equipment due to tariffs"
  • The Associated Press, "READOUT: Trump and Commerce Secretary Lutnick Sign Trade Agreement with China"
  • The letter to Trump signed by 76 companies, including Nike, Adidas, Under Armour, and Puma.