Nike shares sunk 3 percent yesterday after Donald Trump’s victory – over fears his tariffs will cause prices of imported sneakers and sportswear to soar.
While Trump, a self-proclaimed ‘believer in tariffs,’ sees them as necessary, experts warn they could backfire on companies like Nike. Tariffs are government taxes on imported goods, and typically lead to higher store prices unless companies cut profit margins.
‘The tariff proposals represent a serious threat to a lot of businesses and brands,’ Neil Saunders of Global Data told DailyMail.com.
‘If they were enacted at the levels President Trump has spoken about then they would cause some financial damage to Nike, which still makes most of its products overseas.’
During his recent campaign, Trump proposed imposing tariffs of 60 percent or more on Chinese imports, stating in a Fox News interview: ‘We have to do it.’
Nike’s shares sunk 3 percent yesterday following Donald Trump’s victory over Kamala Harris in the 2024 presidential election
Companies are beginning to fear prices for Chinese imports will raise after Trump’s win
Much of Nike’s products come from China.
The Oregon-based sportswear giant has already faced multiple stock dips this year, grappling with weak sales and challenges in the Chinese market.
Saunders added that Trump’s threats might be a negotiating position for the President-elect.
‘Trump has a tactic of making threats as a negotiating position, so there is no guarantee tariffs will come into being at such a high level.
‘That said, there will likely be some tariffs in some shape or form, and Nike will need to adapt its supply chains or pricing in response.’
This 60 percent tax on Chinese imports, along with a 20 percent worldwide tariff, could also raise average US household costs by $3,000 in 2025, according to an October analysis by the Tax Policy Center.
One of Nike’s notable stock plummets this year was its 20 percent price drop on June 28 after the company announced it expected sales to decline.
This drop was the worst day in its 44-year history as a publicly traded company, according to Forbes.
UBS analysts led by Jay Sole wrote to clients that Nike’s ‘fundamental trends are much worse than we realized’ and ‘there will be no quick rebound for Nike’s earnings.’
Nike’s stock sank again by more than 6 percent on October 2 after its third-quarter $11.59 billion revenue fell short of analysts’ $11.65 billion revenue estimate.
‘A comeback at this scale takes time, and while there are some early wins, we have yet to turn the corner,’ Nike CFO Matthew Friend told Yahoo Finance last month.
‘Nike has really been warning us since late last year that the sportswear market was not very strong and that its innovation cycle was not looking particularly good for the beginning of the fiscal year 2025 either,’ Morningstar equity analyst David Swartz told Yahoo Finance.
‘Right now, Nike is in a situation where it doesn’t have a lot of new products coming out, and it is pulling back on some other products.’
Nike’s stocks rose by 10 percent later that month after the company announced Elliot Hill would be replacing John Donahoe as CEO on October 14.
As of 2024, only 16 percent of Nike apparel and 18 percent of its footwear are made from factories in China, according to Oregon Live.
Only 16 percent of Nike footwear was made in China this year
Trump proposed that there be at least a 60 percent tariff on Chinese imports
One of Nike’s notable stock plummets was its 20 percent price drop on June 28, 2024 – the worst day in its 44-year history as a publicly traded company
Nike’s stocks rose by 10 percent in October 2024 after the company announced Elliot Hill would be their new CEO
‘Nike has reduced its exposure to China over recent years, which is positive as this is one of the main countries being potentially targeted by Trump,’ Saunders told DailyMail.com.
‘All of this spooks investors, but it is important to understand that, at present, these are only words and not firm policy proposals.’
If these tariff proposals go through, this would also affect product prices from companies like Columbia Sportswear.
Columbia Sportswear CEO Tim Boyle explained that he expects prices to increase if the tariff is raised to The Washington Post in October 2024.
‘We’re buying stuff today for delivery next fall,’ Boyle said.
‘So we’re just going to deal with it and we’ll just raise the prices. … It’s going to be very, very difficult to keep products affordable for Americans.’
