Sneaker Giant Posts 31% Profit Drop Amid Costly Trade War Fallout
Nike reported a surprising uptick in global sales during its latest quarter—yet profits plunged 31% as the company absorbs the full brunt of new U.S. tariffs on imported footwear and apparel. Executives warned that the Trump administration’s 100% tariffs on Chinese-made goods could cost the brand up to $1.5 billion over the next fiscal year, threatening its hard-fought turnaround strategy.
Key Financial Highlights
- Revenue: $12.8 billion (up 4% YoY, beating analyst expectations)
- Net Income: $1.1 billion (down 31% from $1.6 billion last year)
- Gross Margin: Fell to 42.1% from 45.3% due to tariff-driven cost inflation
Infographic: Nike’s Tariff Exposure Breakdown
| Region of Manufacture | % of Total Production | Tariff Rate (2025) | Estimated Annual Cost Impact |
|---|---|---|---|
| China | 28% | 100% | $950 million |
| Vietnam | 45% | 25% | $400 million |
| Indonesia & Others | 27% | 15–20% | $150 million |
Turnaround Plan Under Pressure
Nike’s “Consumer Direct Acceleration” strategy—focused on digital sales, premium innovation (like the new Nike Adapt 3.0), and reducing wholesale reliance—showed early promise with a 12% jump in online revenue. However, CEO Elliott Hill admitted that tariff costs are now the “single biggest headwind” to profitability.
What’s Next?
- Nike plans to shift 15% more production out of China by end of 2026
- Price hikes of 5–8% expected on select footwear lines in Q1 2026
- Exploring tariff exemptions under new “Made in America” incentives
[INTERNAL_LINK:nike-tariff-impact-analysis]
