Nike Shifts Production and Raises Prices to Mitigate $1 Billion Tariff Cost

Core Viewpoint - Nike is facing a significant financial impact from new U.S. tariffs, estimating a cost of approximately $1 billion due to these tariffs [1][2]. Group 1: Company Actions - Nike is reallocating production to reduce the percentage of footwear imported from China, aiming to decrease it from 16% to the "high single-digit range" within a year [3]. - The company is implementing new arrangements with suppliers and retailers to mitigate cost increases, including a "surgical price increase" set to roll out in the U.S. in the fall [3]. - Nike's President and CEO stated the intention to fully mitigate the impact of these cost headwinds over time through the outlined actions [4]. Group 2: Industry Context - A report indicated that 42% of goods firms and 21% of services firms plan to increase prices in response to tariffs [4]. - The Federal Reserve Bank of New York noted that companies in both service and manufacturing sectors are raising prices on tariffed goods and adjusting operations, which has led to decreased bottom lines for many businesses [5]. - Consumer sentiment is shifting, with nearly half of U.S. shoppers expecting tariffs to raise prices at double the current inflation rate, and 44% have already changed their shopping habits due to tariff-induced price pressures [6].