During Nike’s Q4 FY25 earnings call, the global sportswear brand confirmed its approach to dealing with recent US tariffs, which includes plans to reduce reliance on China as a manufacturing base for goods imported to the US.
Matthew Friend, executive vice president and CFO at Nike, told investors: “Over the past 50 years Nike has built a globally expansive supply chain that is responsive and resilient, we have strong relationships with our factory partners, and our leadership team is experienced in managing through disruption.
“Nike has consistently been a top payer of US duties, with an average duty rate on footwear imported into the US in the mid-teens range. Therefore, these tariffs represent a new and meaningful cost headwind, and we are taking actions that balance the consumer, our partners, our Win Now actions, as well as the long-term positioning of our brands in the marketplace.”
He explained: “We will optimise our sourcing mix and allocate production differently across countries to mitigate the new cost headwind in the United States. Despite the current elevated tariffs for Chinese products imported into the United States, manufacturing capacity and capability in China remains important to our global source base.
“Currently, China represents roughly 16% of the footwear we import into the United States, and we expect this to reduce to the high-single digit range by the end of FY26, with supply from China re-allocated to other countries around the world.”
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Friend also confirmed that Nike will be working with its suppliers and retail partners to mitigate this structural cost increase, in order to minimise the overall impact on the consumer. In addition, Friend noted that Nike has implemented a surgical price increase in the US, with phased implementation beginning in the autumn of this year.
Nike estimates that the new tariff rates currently in place will result in a gross incremental cost increase to the company of approximately $1 billion. Friend said: “We will evaluate corporate cost reduction as appropriate; however, our highest priority right now continues to be reigniting brand momentum through sport and stabilising our business.”
This comes after Nike’s competitor Adidas warned in April that Trump’s tariffs would lead to price increases in the US for some of the brand’s most popular products.
Nike’s lead product manager for global supply chain analytics, Mike Kelley, will be speaking at IntraLogisteX USA in September.
IntraLogisteX USA is returning to Miami, Florida on 17-18 September to provide focused environment for the entire logistics and supply chain industry to share ideas, discover solutions and improve operational efficiency, agility, scalability, and accuracy.
