Nike has recently announced that President Donald Trump's tariffs on key trading partners could increase the company's costs by approximately $1 billion (£730 million) this year. In light of this significant financial impact, Nike's executives have stated that the sportswear giant will reduce its dependence on manufacturing goods in China as a strategic move to mitigate the effects of US trade policies.
In response to the evolving tariff situation, Nike indicated that it would begin raising prices on certain trainers and apparel in the US starting in early June. This decision comes shortly after rival company Adidas warned of similar price hikes due to the imposition of tariffs. Following Nike's announcement, the company's shares surged by over 10% in extended trading hours, buoyed by a forecast that projected a smaller-than-expected decline in first-quarter revenue.
Despite reporting its most disappointing quarterly figures in over three years, Nike's earnings exceeded analysts' expectations. The company's fourth-quarter revenue totaled $11.1 billion, marking its lowest figure since the third quarter of 2022. Chief Financial Officer Matthew Friend confirmed that Nike plans to shift some of its production out of China, which has been subjected to the steepest tariff increases. Currently, China manufactures 16% of Nike's footwear sold in the US, but that figure is expected to drop to a high single-digit percentage by the end of May 2026.
On April 2, Trump announced sweeping Liberation Day tariffs affecting a wide range of goods from various countries. However, later that month, he suspended many of these tariffs to facilitate discussions with the impacted nations, with a top advisor suggesting that the administration aims to finalize 90 trade deals in 90 days. This move temporarily reduced tariffs to 10%, a significant decrease from the higher rates previously imposed on numerous trading partners.
The White House is currently facing increasing scrutiny regarding the future of these tariffs, as the 90-day pause is set to expire on July 9. During a recent address at the White House, Trump expressed optimism about the ongoing negotiations, highlighting a tentative agreement with China and hinting at potential discussions with India. However, he also cautioned that not all countries would receive favorable terms, stating, "We're not going to make deals with everybody."
Commerce Secretary Howard Lutnick later clarified that the agreement with China formalized previously discussed terms, including a commitment from Beijing to supply critical rare earth minerals, essential for various industries, including aerospace and renewable energy. Treasury Secretary Scott Bessent has indicated that Trump might extend the deadline based on the progress of negotiations.
On Thursday, White House spokesperson Karoline Leavitt emphasized that the deadline for the tariff discussions was not critical, asserting that Trump is prepared to offer countries new deals that would establish revised tariff rates. This month, the US and China reached an agreement aimed at ensuring US access to vital magnets and rare earth materials, following concerns that supply issues could reignite trade tensions between the two economic powerhouses.
As the situation continues to evolve, Trump announced that he had signed a deal with China, although further details remain undisclosed. A White House official later confirmed that the administration and China had come to an understanding regarding the framework for implementing the Geneva agreement. The trade relationship between the US and China had previously been strained due to escalating tariffs, which had dramatically curtailed trade between the two nations.
