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Nike to cut China output by 2026 as Trump tariffs threaten $1 billion hit
Nike said it plans to significantly reduce its reliance on China-based manufacturing for the US market by May 2026, as part of a broader strategy to mitigate the impact of US tariffs imposed under President Donald Trump's trade policies, Reuters reported. The company expects these tariffs could add around $1 billion to its costs, executives said during a post-earnings call.
Chief Financial Officer Matthew Friend said, about 16 per cent of Nike's footwear imported into the US currently comes from China — the country most affected by Trump's sweeping tariff hikes. Nike plans to cut that figure to a 'high single-digit percentage range' within two years by reallocating production to other countries.
'We will continue to evaluate corporate cost reductions to absorb the impact of these tariffs,' Friend said, as quoted by Reuters. Nike has already begun raising prices on select products in the US, following a similar move by rival Adidas.
US tariff decisions spark global trade recalibrations
US President Trump's 'Liberation Day' tariff package, announced on April 2, imposed broad-based duties on imports from major trade partners. Though most of those tariffs were paused for 90 days to allow for negotiations, the looming July 9 expiry has led to speculation on whether further rate hikes — potentially up to 45 per cent — could be enforced.
At a White House press event, Trump said, 'We're not going to make deals with everybody. Some we're just going to send them a letter… You're going to pay 25, 35, 45 per cent.' While some deals — including one with China — have emerged, others are still under negotiation.
Commerce Secretary Howard Lutnick told Bloomberg that a deal with China includes rare earth mineral supply commitments, while Treasury Secretary Scott Bessent hinted at a possible extension of the 90-day tariff pause, depending on how talks unfold.
Earnings beat expectations despite weak quarter
Despite reporting a 12 per cent year-on-year fall in fourth-quarter revenue to $11.1 billion — its lowest since Q3 2022 — Nike still beat Wall Street expectations, which had forecast a 14.9 per cent decline. Shares rose more than 10 per cent in extended trading after the company projected a smaller-than-expected revenue drop in the first quarter.
Running category regains momentum
Nike's strategy of emphasising core sports categories, particularly running, is beginning to pay off. The company has refocused efforts on high-performance shoes such as the Pegasus and Vomero, while scaling back production of legacy styles like the Air Force 1.
Nike also increased its marketing spend by 15 per cent year-on-year. A high-profile event in Paris saw athlete Faith Kipyegon attempt a sub-four-minute mile, drawing attention to Nike's renewed focus on athletic performance.
China remains a challenge for Nike
While the company is minimising its manufacturing dependence on China, executives acknowledged that recovery in the Chinese market remains sluggish due to broader economic challenges and stiff competition, Reuters mentioned.
'We are optimistic, but we know this turnaround will take time,' said Friend, highlighting the company's long-term commitment to adjusting both supply chains and marketing strategies amid evolving global trade dynamics.
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