American athletic footwear and apparel corporation Nike has said it anticipates an additional $1 billion in costs due to tariffs imposed under the US' Trump administration, as the company seeks to shift production away from China.
"These tariffs represent a new and meaningful cost headwind," Matthew Friend, Nike's chief financial officer, said Thursday during the company's earning briefing.
"With the new tariff rates in place today, we estimate a gross incremental cost increase to Nike of approximately $1 billion. We intend to fully mitigate the impact of these headwinds over time," he added.
Last year, nearly 60% of all Nike-branded apparel was produced in Vietnam, China, and Cambodia, while Vietnam, Indonesia, and China accounted for 95% of Nike's footwear manufacturing.
He noted that while China "remains important to our global source base," the company plans to reduce footwear imports to the US from around 16% to the "high-single-digit range by the end of fiscal 2026," instead sourcing more from other countries.
Friend added that the company plans to introduce a "surgical price increase" in the US starting this fall and intends to cut expenses through "corporate cost reduction" measures.
Nike's net income for the fourth quarter plunged 86% to $211 million amid tariff impacts and weaker consumer spending, marking its worst quarterly earnings in over three years with revenues down 12% to $11.1 billion.
