Trump’s tariffs are beginning to impact Americans in a real way. When they were established, the president boasted that they would not affect consumers, in fact, companies would absorb the price increase, pass it on to their suppliers or move production to the US, but that is not reality, and most companies are starting to increase their prices to maintain profitability. One of the most transparent companies that is increasing their prices is Nike, who gave a rundown of the specific increases.
While the Oregon-based company did not cite the tariffs as the specific reason for the price increases in an interview that was published in Sportico, the timing of the increases is suspicious and lines up perfectly with the end of the moratorium that Trump placed on the increase. Having said that, their statement was quite diplomatic, expressing solely that they were making “pricing adjustments as part of our seasonal planning”.
However, it does not take an expert to see that the increase lines up with the extra costs adjusted to production that they are not incurring and that they are choosing to not pass on to suppliers or absorb.
Nike produces most of its footwear (50%) and its apparel (28%) in Vietnam, which until now made it quite cheap to produce and import into the country, with just a 10% tax on these items. Thanks to Trump, this tariff will now be of 46%, which will make the import costs a lot less affordable and will ensure that the prices need to be raised in order to maintain the same profit margin. Luckily, the prices on import are usually based on production costs and not retail price, otherwise the increase would be a lot steeper.
China is also a big production hub for Nike, with 18% of its footwear and 16% of its apparel in the 2024 financial year coming from the Asian giant, but we all know that the tariffs on this country keep mounting and so it is impossible to say the level they will be in a few months. At the time of this article, the percentage is set at 145%, which is not a number that can be absorbed by companies and which will likely mean a shift in production for Nike very soon.
The temporary 90 day 30% import tax that the Administration offered as a bargaining chip is not expected to last long enough to make an impact.
Because of these import taxes, Nike and 76 more brands wrote a letter to Trump from the Footwear Distributors and Retailers of America warning him about the effects that implementing these tariffs would have on the U.S. footwear industry.
As they explained, “Unlike some industries, we make items Americans must purchase and cannot finance. This means we generally cannot make our products at such high price points and bake in the costs of these tariffs. These tariffs will not drive shoe manufacturing back to the U.S. It takes significant capital investment and years of planning to shift sourcing.”
For now the letter seems to have fallen on deaf ears.
The Nike price increases due to the tariffs
According to a report from CNBC, Nike is planning to increase the price on footwear that currently retails for between $100 and $150 in $5, and any footwear that is sold for over $150 will increase $10. Apparel will also be subject to increases of at least $2
Luckily for fans of the company not every item will have a price increase, products priced below $100 will continue to retail for the existing amount and so will children’s products. As a final nod to their loyal customers, Nike Air Force 1 sneakers will remain at $115.
The increases will take effect on June 1 according to unofficial sources, but they may be put in place earlier.