Nike has stated that the tariffs imposed by US President Donald Trump on major trading partners could result in an additional cost of approximately $1 billion (£730 million) for the company this year.
The sportswear giant’s executives have also announced plans to decrease their reliance on manufacturing in China in order to mitigate the impact of US trade policies.
In response to Trump’s tariffs, Nike announced that it would be raising prices on certain shoes and clothing in the US starting in early June, following in the footsteps of competitor Adidas who had previously warned of necessary price increases due to tariffs.
Following the company’s forecast of a smaller decrease in first quarter revenue than expected by analysts, Nike’s shares rose by over 10% in after-hours trading. Despite this positive news, the company’s earnings for the last quarter were still the lowest in over three years.
Nike reported fourth quarter revenue of $11.1 billion, the lowest since the third quarter of 2022.
The company’s chief financial officer, Matthew Friend, stated that Nike will be shifting some production from China (which was hit with the largest tariff increases) to other countries in response to Trump’s tariffs. Currently, 16% of Nike footwear is manufactured in China and sold in the US, but Friend announced that this percentage will be reduced to a “high single-digit range” by the end of May 2026.
On April 2nd, Trump announced significant tariffs on goods from various countries around the world as part of “Liberation Day.” However, later that month, he suspended most of these tariffs in order to hold talks with the affected countries. One top adviser even promised “90 deals in 90 days.” This resulted in tariffs being reduced to 10% instead of the initially proposed higher rates for goods from many trading partners.
What tariffs did Trump announce and why?
As the 90-day pause on tariffs is set to expire on July 9th, the White House is now facing increasing questions about the President’s plans for tariffs.
In a statement at the White House on Thursday, Trump claimed that talks were progressing well and mentioned an agreement reached with China. He also hinted at another deal with India. However, he also warned, “We’re not going to make deals with everybody.” He went on to say, “Some we’re just going to send them a letter, say thank you very much. You’re going to pay 25, 35, 45%. That’s the easy way to do it.” He added that his team prefers to make more deals than he would personally do.
Commerce Secretary Howard Lutnick later told Bloomberg that the agreement with China formalized terms discussed in trade talks, including a commitment from Beijing to provide rare earth minerals used in various industries such as aviation and wind energy.
Treasury Secretary Scott Bessent has previously suggested that Trump may extend the deadline for tariffs depending on the progress of negotiations.
On Thursday, White House spokesperson Karoline Leavitt stated that the deadline is not crucial and that Trump is prepared to present countries with “deals” that would establish new tariff rates.
Earlier this month, the US and China reached an agreement to ensure US access to critical magnets and rare earths, after concerns about access had the potential to reignite trade tensions between the two economic superpowers.
During his statement at the White House on Thursday, Trump mentioned that he had “signed” a deal with China, but did not provide further details. A White House official later stated that the administration and China have agreed to a framework to implement the Geneva agreement.
Following Trump’s announcement of tariffs and China’s retaliatory tariffs in April, trade between the two nations was nearly halted. However, the US and China have since agreed to reduce (but not eliminate) these tariffs.