New US tariffs to cost Nike $1 bn this year

In a conference call on June 26, the brand’s chief financial officer Matthew Friend spoke of the negative impact Donald Trump’s new tariffs are causing.

“Over the past fifty years Nike has built a globally expansive supply chain that is responsive and resilient, and we have strong relationships with our factory partners,” he said. “Nike has consistently been a top payer of US duties, with an average duty rate on footwear imported into the US in the mid-teens range. Therefore, these tariffs represent a new and meaningful cost headwind. With the new tariff rates in place today, we estimate a gross incremental cost increase to Nike of approximately $1 billion.”

Production base

Nike once manufactured around 30 per cent of its shoes in China, but today, Vietnam is its largest production base, accounting for over 50 per cent of footwear output. Indonesia is another major hub, contributing around 25 per cent of Nike’s shoes. The brand has also been increasing sourcing from Cambodia and India, particularly for apparel.

Overall, Nike has its products made in 41 countries, using 525 suppliers and a little over one million workers and in terms of net sales, footwear accounted for the biggest portion of 59 per cent, followed by apparel with 35 per cent, and accessories and gear with per cent.

Of Nike’s 525 listed suppliers in 2025, 169 are now in Vietnam (employing around 463,000 workers), compared to 159 in China.

Sourcing mix

“We will now optimise our sourcing mix and allocate production differently across countries to mitigate the new cost headwind in the United States,” Friend said. “Despite the current elevated tariffs for Chinese products imported into the United States, manufacturing capacity and capability in China remains important to our global source base.”

“China represents roughly 16 per cent of the footwear we import into the United States, and we expect this to reduce to the high-single digit range by the end of our 2026 financial year, with supply from China re-allocated to other countries around the world.

“We are partnering with our suppliers and our retail partners to mitigate this structural cost increase, in order to minimise the overall impact to the consumer. As part of our regular approach to seasonal planning, we have implemented a surgical price increase in the United States, with phased implementation beginning in Fall 2025.

“We will also evaluate corporate cost reduction as appropriate, but our highest priority right now continues to be reigniting brand momentum and stabilising our business.”

“While our financial results are in-line with our expectations, they are not where we want them to be,” added president and CEO Elliott Hill. “Moving forward, we expect our business to improve as a result of the progress we’re making.”

ALCHEMPro News Desk (IL)