Sportswear giant Nike has issued a warning, estimating that the trade tariffs imposed by US President Donald Trump might cost it an additional US $ 1 billion.
Following a recent warning that it would hike prices on certain clothes and sneakers in the US to offset rising tariffs, the business said it was taking steps to mitigate the impact. In an effort to cut expenses, Nike also announced that it will cut back on shipments from China to the US market.
By the conclusion of the current fiscal year, it hopes to lower the high single-digit percentage of footwear that is currently made in China—roughly sixteen percent—and then imported into the United States.
The group’s bosses stated that the supply in China would be transferred to other nations worldwide.
According to Nike’s chief finance officer, Matt Friend, these tariffs are a significant and novel cost obstacle. He estimated that if tariffs stay at their current levels, the cost impact will be almost US $ 1 billion.
Despite the current high tariffs on Chinese imports into the US, Friend added that Nike will optimise its sourcing mix and distribute production differently across nations to offset the new cost headwind into the US. He also noted that Nike’s global source base still depends on its manufacturing capacity and capability in China.
Additionally, he stated that the group’s goal was to “minimise the overall impact to the consumer,” even though it acknowledged that it would begin enacting price increases in the US in the fall. Plans could potentially reduce corporate expenses to make up for the anticipated cost impact.
Although the Wall Street outturn was higher than anticipated, Nike’s US-listed shares rose overnight Thursday as the company revealed its worst quarterly earnings in over three years.
