Nike, Trump tariffs cost 1 billion USD - Company will reduce production in China to reduce losses
Nike expects tariffs imposed by the Trump administration to increase costs by about $1 billion. The company plans to reduce production in China and Vietnam to mitigate the losses.
Nike expects costs to rise by about $1 billion as a result of Donald Trump's tariff war. The sportswear company plans to significantly reduce its production in China to reduce losses.
The company's market value has fallen by a third over the past year and the clothing giant is taking action to cushion the blow, including raising prices in the US and sourcing from other countries.
"These tariffs represent a new and significant cost burden. With the new tariff rates in effect today, we estimate a gross incremental cost increase of approximately $1 billion. We aim to fully mitigate the impact of these burdens over time," sources within the company said.
Last year, almost 60% of all Nike-branded apparel was produced in Vietnam, China and Cambodia. In terms of sneakers, Vietnam, Indonesia and China produced 95% of the total in 2024.
"We have strong relationships with our manufacturing partners and our management team is experienced in managing disruptions. We will optimize our supply mix and allocate production differently across locations to mitigate new costs in the United States," the official sources announced.
Production capacity and capability still remain important to the company, despite the 60% tariff rate imposed by the US, which accounts for about 16% of sneaker imports into America.
The clothing giant said it was working to minimize the impact on customers. However, a "surgical price hike" is expected in the US starting in the fall.
The comments came as Nike reported its lowest quarterly profit in more than three years, as revenue fell 12% to $11.1 billion at the end of May.
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