Nike Cuts Reliance on Chinese Factories Amid Tariff Pressure and Trade Uncertainty
Nike is cutting back on its use of Chinese factories because trade tensions are rising and tariff costs are rising under the Trump administration. Executives said that U.S. tariffs could cost Nike an extra $1 billion this year, which is why they changed their manufacturing strategy.
Nike said in a recent earnings call that it will cut back on production in China to lessen the effects of trade policies. The move comes after the company said it would raise prices on shoes and clothes in the U.S. starting in June. Adidas made a similar choice because of costs related to tariffs.
Tariffs Prompt Shift in Production Strategy
Matthew Friend, the company’s chief financial officer, said that they will move production out of China. China makes 16% of Nike’s shoes that are shipped to the US. By May 2026, that share will be in the “high single-digit range.”
The change is a reaction to Trump’s “Liberation Day” tariffs, which would have put a 46% tax on Vietnamese goods and a 32% tax on Indonesian goods, both of which are important places for Nike to make things.
Trade Talks and Temporary Relief
The U.S. later paused most tariffs to allow time for negotiations, lowering them temporarily to 10%. But that 90-day pause ends on July 9, creating uncertainty about what comes next.
Rump was hopeful, saying that there was an agreement with China and that things might be getting better with India. But he also said that if talks fail, some countries may still have to pay tariffs as high as 45%.
Nike beat earnings expectations even though it had its worst quarter in more than three years. In after-hours trading, its shares went up more than 10%. The company’s revenue for the fourth quarter was $11.1 billion, the lowest since the third quarter of 2022.
In a different deal, China and the U.S. agreed to make sure that rare earth metals can be exported to the U.S. The U.S. agreed to lift some export restrictions in exchange. The deal helps ease trade tensions and makes sure that important supply chains stay open.
Nike is cutting back on its use of Chinese factories and changing its global production to deal with changing U.S. trade policies.
