### Nike Faces $1 Billion Cost Due to Trump Tariffs: A Shift in Production Strategy Nike, the global sportswear giant, has announced that it anticipates a significant financial impact from the ongoing tariff war initiated by former President Donald Trump. The company estimates that U.S. tariffs on imports could add approximately **$1 billion** to its costs. In response, Nike plans to reduce its manufacturing reliance on China and shift production to other countries to mitigate these financial pressures. This strategic move comes as the company aims to maintain its market position amidst rising costs and changing trade policies [https://www.theguardian.com/business/2025/jun/27/nike-says-trump-tariff-war-could-cost-it-1bn][https://apnews.com/article/nike-china-tariff-trump-f84fe37e11dbf4b439d8655d3533380c]. ### Breakdown of Nike's Response to Tariff Challenges 1. **Cost Impact**: Nike has warned that the tariffs could lead to an increase in costs by around **$1 billion** this year, prompting the need for strategic adjustments [https://www.business-standard.com/world-news/nike-cut-china-output-donald-trump-us-trade-tariffs-125062700483_1.html]. 2. **Production Shift**: The company plans to significantly reduce its manufacturing operations in China by **2026**, reallocating production to other countries to lessen the impact of U.S. tariffs [https://www.thestar.com.my/business/business-news/2025/06/27/nike-says-us-tariffs-will-add-us1bil-to-costs-plans-to-reduce-china-production]. 3. **Price Adjustments**: To offset the anticipated cost increases, Nike is considering "surgical" price hikes on its products starting in **Fall 2025** [https://www.benzinga.com/markets/equities/25/06/46133512/nike-faces-1-billion-trump-tariff-blow-plans-surgical-price-hikes-starting-fall-2025-to-offset-impact]. 4. **Market Reaction**: Following the announcement, Nike's stock saw a notable increase, rising by **15%** at the opening bell, indicating investor confidence in the company's strategic pivot [https://www.whec.com/ap-top-news/nike-soars-on-a-production-shift-away-from-china-but-it-warns-of-a-1-billion-tariff-hit]. ### Supporting Evidence and Data - **Projected Cost Increase**: Nike estimates a **$1 billion** increase in costs due to tariffs, which has prompted a reevaluation of its supply chain strategy [https://www.indexbox.io/blog/nike-faces-1-billion-tariff-costs-plans-strategic-adjustments]. - **Stock Performance**: The company's shares jumped **15%** after announcing its plans to shift production away from China, reflecting positive market sentiment [https://www.sootoday.com/national-business/nike-soars-on-a-production-shift-away-from-china-but-it-warns-of-a-1-billion-tariff-hit-10873426]. - **Production Timeline**: Nike aims to reduce its reliance on Chinese manufacturing by **2026**, indicating a long-term strategy to adapt to changing trade conditions [https://www.devdiscourse.com/article/business/3483538-nike-maneuvers-around-tariff-challenges-to-boost-market-position]. ### Conclusion: Strategic Adjustments Amidst Tariff Pressures In summary, Nike is navigating a challenging landscape due to U.S. tariffs that could add **$1 billion** to its costs. The company is proactively addressing these challenges through a multi-faceted strategy: 1. **Cost Mitigation**: Anticipating a significant cost increase, Nike is adjusting its supply chain to reduce reliance on China. 2. **Production Diversification**: Plans are in place to shift production to other countries by **2026**. 3. **Price Strategy**: Nike will implement targeted price increases to offset the financial impact of tariffs. 4. **Market Confidence**: The positive reaction in stock performance suggests that investors are optimistic about Nike's strategic direction. By taking these steps, Nike aims to maintain its competitive edge while adapting to the evolving trade environment [https://english.aawsat.com/fashion/5158726-nike-says-us-tariffs-will-add-1-billion-costs-plans-reduce-china-production].