Nike Faces $1 Billion Tariff Blow—Will the Swoosh Bounce Back or Break Down?
Nike (ticker NKE, traded on the NYSE within the consumer goods/apparel sector) warned today that new U.S. import tariffs will add an estimated $1 billion to its expenses in fiscal 2026—even as the brand reports better-than-expected earnings. The company’s shares surged by around 15% following the announcement of strategic shifts aimed at protecting margins.
A deep dive into the numbers reveals that about 16% of Nike’s U.S.-bound footwear is still produced in China. To combat tariff pressure, CFO Matthew Friend and CEO Elliott Hill outlined plans to reduce this dependency to the high single-digit percentage range by year-end 2026—redistributing manufacturing across countries like Vietnam and Indonesia.
Meanwhile, Nike is rolling out “surgical” price increases on U.S. products starting this fall and exploring cost cuts in operations. Despite a 12% drop in Q4 revenue to $11.1 billion, quarterly earnings topped expectations at $211 million, reflecting solid execution in a turbulent landscape.
Investor reaction has been strong: Nike stock jumped between 11–15% during after-hours and pre-market trading as the market embraced the company’s decisive turnaround strategy. Analysts view the tariff hit as already priced in, emphasizing Nike’s pivot toward core sports lines and efficient supply-chain adjustments as keys to recovery.
In short, Nike is facing a major cost hurdle with tariffs, but its aggressive global production realignment, selective U.S. price hikes, and cost-cutting measures may help smooth the financial blow—and keep the Swoosh flying strong.