Nike plans big sourcing changes and forecasts a revenue dip, but it’s not all bad news. Here's what the sportswear giant is doing to handle the latest U.S.-China tariff shake-up.
Nike announced it will cut its China production for the U.S. market from 16% to a high single-digit percentage by May 2026. The move is aimed at softening the blow from new tariffs imposed by the U.S. government on Chinese imports.
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$1 Billion Tariff Blow Drives Strategic Shift
According to executives, the ongoing tariff policies could add about $1 billion to Nike’s costs. CFO Matthew Friend emphasized reallocation of production and sourcing optimization to offset these pressures.
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Corporate Costs and Product Prices Under Review
Nike will also assess corporate cost cuts and has already raised prices for some U.S. products. However, analysts like David Swartz of Morningstar believe that if competitors do the same, Nike might retain market share despite price hikes.
Despite losing ground in the running category, Nike’s fresh investment in models like Pegasus and Vomero has shown results. The category returned to growth in Q4, while classic sneakers like Air Force 1 saw scaled-back production.
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Q4 Sales Beat Expectations Despite China Woes
Nike’s Q4 revenue dropped 12% to $11.10 billion—less than the expected 14.9% dip. Marketing spending surged 15%, including events like Faith Kipyegon’s record attempt in Paris. Meanwhile, challenges persist in China due to tough economic conditions and rising competition.
