Nike said Thursday it would cut its reliance on production in China to mitigate the impact from President Trump’s renewed tariffs on imports, following today’s signing of a new trade deal that maintains tough restrictions on Chinese goods.
Trump’s comprehensive tariff strategy, which began during his first presidency with targeted levies on Chinese imports and has now been expanded in his second term, could add around $1 billion to Nike’s costs, company executives said on a post-earnings call after the sportswear giant topped estimates for fourth-quarter results.
The tariffs, which Trump first implemented in 2018 as part of his trade war with Beijing and reimposed upon taking office in January 2025, have intensified following today’s trade agreement that keeps substantial import duties in place while establishing new framework for bilateral commerce.
Consumer goods remain one of the sectors most affected by the ongoing tariff dispute between the world’s two largest economies, but Nike executives said they were focused on reducing the financial impact through strategic sourcing changes.
Nike reported a smaller-than-expected drop in fourth-quarter revenue and beat profit estimates. REUTERS
China, subject to Trump’s most aggressive tariff increases, accounts for about 16% of the shoes Nike imports into the United States, chief financial officer Matthew Friend said.
But the company aims to cut that figure to a “high single-digit percentage range” by end-May 2026 by shifting production to other countries—a move accelerated by today’s trade deal which maintains pressure on companies to diversify away from Chinese manufacturing.
“We will optimize our sourcing mix and allocate production differently across countries to mitigate the new cost headwind into the United States,” said Friend.
Nike will also “evaluate” corporate cost reductions to deal with the tariff impact, Friend said. The company has already announced price increases to partly offset the tariff costs, a strategy likely to continue under the new trade framework.
“The tariff impact is significant. However, I expect others in the sportswear industry will also raise prices, so Nike may not lose much share in the US,” said David Swartz, analyst at Morningstar Research.
New CEO Elliott Hill is focusing on product innovation and marketing around sports. AP
Nike forecast first-quarter revenue to fall in the mid-single digits, slightly better than estimates of a 7.3% drop, as CEO Elliott Hill’s strategy to focus product innovation and marketing around sports begins to pay off despite the challenging trade environment.
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The running category returned to growth in the fourth quarter, Friend said. Having lost share in the fast-growing market, Nike has invested heavily in running shoes such as Pegasus and Vomero, while scaling back production of sneakers such as the Air Force 1.
Under Hill, who joined in October last year, Nike is investing more into sports-focused marketing, with spending up 15% year-on-year in the quarter. On Thursday, it hosted an attempt by sponsored athlete Faith Kipyegon to run a mile in under four minutes.
Nike’s fourth-quarter sales fell 12% to $11.10 billion, compared with analysts’ expectation of a 14.9% drop to $10.72 billion, according to data compiled by LSEG.
China continued to be a pain point, with executives saying a turnaround in the country will take time as Nike contends with tougher economic conditions, increased competition, and the ongoing impact of Trump’s trade policies that show no signs of easing under today’s agreement.
The company’s inventory was flat as of May 31, compared with a year ago, at $7.5 billion.
