Nike plans to increase prices due to impact of Trump’s tariffs on China

Nike is planning to reduce its dependence on China for manufacturing goods intended for the US market in response to the impact of tariffs imposed by the Trump administration. The company has also projected a smaller decline in first-quarter revenue than initially anticipated.

Following the release of its earnings report on Thursday, Nike’s shares surged by 15 percent at the start of trading on Friday. The sports apparel giant announced its strategy shift during the earnings call, citing the need to address the significant financial burden imposed by US tariffs on Chinese imports.

According to Nike’s CFO, Matthew Friend, the tariffs enforced by President Trump could result in an additional $1 billion in costs for the company. Currently, approximately 16 percent of the shoes Nike imports into the US come from China. However, Nike plans to decrease this percentage to a “high single-digit” range by May 2026 by redistributing production to other countries.

To counterbalance the impact of tariffs, Nike is exploring various options, including adjusting its sourcing practices and reorganizing production across different countries. Despite being heavily affected by the trade dispute between the US and China, Nike is actively working to mitigate the financial implications of the tariffs. The company has already announced price hikes for certain products in the US market.

Analysts predict that the sportswear industry as a whole will likely experience price increases as a result of tariffs, which could potentially minimize any market share loss for Nike in the US. CEO Elliott Hill’s focus on product innovation and targeted marketing efforts within the sports sector has shown promising outcomes, especially in the running category, which saw growth in the fourth quarter after a period of decline.

Nike’s investment in running shoes, such as the Pegasus and Vomero models, has aimed at regaining lost market share in the running segment. In contrast, production of other sneaker lines, like the Air Force 1, has been scaled back to align with changing consumer preferences. Analysts expect that the introduction of new running shoes and sportswear products will offset declining sales from Nike’s traditional sneaker offerings at partner retail stores.

Additionally, Nike recently hosted an event featuring sponsored athlete Faith Kipyegon in an attempt to run a mile in less than four minutes. Although this goal was not achieved, the event garnered attention and showcased product innovation and the brand’s commitment to athletic excellence.

Looking ahead, Nike expects first-quarter revenue to decline by a mid-single digit percentage, a more positive outlook compared to analysts’ projections. The company’s fourth-quarter sales dropped by 12 percent to $11.10 billion, outperforming estimates of a 14.9 percent decrease to $10.72 billion.

Despite the challenges posed by tariffs and market conditions in China, Nike remains focused on driving growth and adapting to the changing trade landscape. As the potential for a trade deal between the US and China emerges, businesses like Nike are bracing for potential impacts on prices and consumer costs. Other major retailers, including Walmart and Target, have also acknowledged the need to raise prices due to the tariff environment. Through strategic adjustments and a focus on innovation, Nike is navigating the complexities of global trade to ensure sustained growth and market competitiveness.