How Nike Will Navigate a $1 Billion Tariff Impact
Nike is bracing for impact from costly tariffs. The company expects a gross incremental cost increase of about $1 billion with the new tariffs in place as of June 26.
Matthew Friend, Nike’s executive VP and CFO, outlined the company’s mitigation plan during a recent call with investors following its fiscal 2025 Q4 earnings release.
Nike will begin by optimizing its sourcing mix and allocating production differently across countries to alleviate cost impact in the United States. As China represents about 16% of the footwear Nike imports in the U.S., the overseas supply chain operations are an important part of its global sourcing base, said Friend. As a result, Nike looks to reduce this to the high single-digit range by the end of fiscal year 2026, reallocating supply to other countries.
Also: Nike Sports research lab uses AI and 4D motion capture to expedite product innovation
Nike also plans to work with suppliers and retail partners into 2026 to help soften the blow of structural cost increases that could affect consumers. However, a targeted price increase is planned in the U.S., with a phased rollout beginning this fall as part of the brand’s seasonal planning.
Friend added that Nike will evaluate its corporate cost reduction as appropriate, but emphasized that the company’s highest priority is reigniting brand momentum through sport and stabilizing its business.
Company Performance
The tariffs come at a time when Nike is suffering from revenue declines (down 11% in North America in the fourth quarter). Nike Direct and Digital were also down, 14% and 25%, respectively, with store performance rising slightly, up 3%.
On a broader level, Nike has been implementing a "Win Now" plan as part of its turnaround strategy, which includes entering Amazon with a select assortment of footwear, apparel and accessories; building an integrated marketplace to serve a wider range of consumers; and shifting its product portfolio to rebalance sportswear and performance.
“We will continue to monitor developments closely, and I am confident in our ability to lean on our strengths, our experience and our scale to navigate through this disruption,” said Friend.
