Nike announced Thursday that it expects to incur $1 billion in additional costs due to tariffs imposed by President Donald Trump.
In response, the company also plans to reduce its manufacturing presence in China.
“These tariffs represent a new and meaningful cost headwind,” said Matthew Friend, Nike’s chief financial officer, in a statement via The Guardian.
“With the new tariff rates in place today, we estimate a gross incremental cost increase to Nike of approximately $1 billion. We intend to fully mitigate the impact of these headwinds over time.”
According to The Guardian, nearly 60% of Nike’s activewear was made in Vietnam, China, and Cambodia in 2024. Additionally, 95% of its footwear was produced in Vietnam, Indonesia, and China.
Despite the challenge, Nike says it’s equipped to adapt.
“We have strong relationships with our factory partners, and our leadership team is experienced in managing through disruption,” Friend said.
“Nike has consistently been a top payer of US duties. We will optimise our sourcing mix and allocate production differently across countries to mitigate the new cost headwind into the United States.”
To cushion the impact, Nike will introduce what it calls a “surgical price increase” for consumers starting this fall.
The company also plans to cut overhead through “corporate cost reduction” efforts.
(nj)
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