Nike, the iconic American sportswear brand, expects its annual costs to rise by approximately US$1 billion (around HK$7.85 billion) due to the tariff policies enacted by the Trump administration. In response, the company plans to restructure its supply chain and increase prices in the US market this fall to alleviate operational pressures.
Nike heavily relies on its Asian production network. Last year, around 60% of its apparel was manufactured in China, Vietnam, and Cambodia, while 95% of its footwear came from China, Indonesia, and Vietnam. Despite tariffs as high as 60% on imported footwear, China still accounts for 16% of US shoe imports.
Nike CFO Matthew Friend pointed out that these tariffs are entirely new and represent a substantial cost impact. He also said that Nike will optimize its global manufacturing footprint and reallocate production based on manufacturing conditions in each country.
Nike's latest earnings report revealed a 12% year-on-year revenue drop to US$11.1 billion (around HK$87.1 billion) for the quarter ending in May, marking its weakest quarterly performance in over three years. To address financial challenges, Nike announced plans for "limited and targeted" price adjustments in the US market this fall while cutting operational costs to maintain financial stability.
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