{"id":3063,"date":"2026-09-14T12:28:56","date_gmt":"2026-09-14T10:28:56","guid":{"rendered":"https:\/\/www.dragontactics.com\/2026\/09\/14\/offshoring-cutting-margins-losing-momentum-because-of-tariffs-nike-forced-to-rethink-its-model\/"},"modified":"2026-09-14T12:28:56","modified_gmt":"2026-09-14T10:28:56","slug":"offshoring-cutting-margins-losing-momentum-because-of-tariffs-nike-forced-to-rethink-its-model","status":"publish","type":"post","link":"https:\/\/www.dragontactics.com\/zh-hans\/2026\/09\/14\/offshoring-cutting-margins-losing-momentum-because-of-tariffs-nike-forced-to-rethink-its-model\/","title":{"rendered":"Offshoring, cutting margins&#8230; Losing momentum because of tariffs, Nike forced to rethink its model"},"content":{"rendered":"\n<figure class=\"wp-block-image size-large\"><img loading=\"lazy\" decoding=\"async\" width=\"1677\" height=\"712\" src=\"https:\/\/www.dragontactics.com\/wp-content\/uploads\/2026\/09\/fd7dd4c4-0187-4e38-80a3-21f97893fe18-edited.png\" alt=\"\" class=\"wp-image-2854\" srcset=\"https:\/\/www.dragontactics.com\/wp-content\/uploads\/2026\/09\/fd7dd4c4-0187-4e38-80a3-21f97893fe18-edited.png 1677w, https:\/\/www.dragontactics.com\/wp-content\/uploads\/2026\/09\/fd7dd4c4-0187-4e38-80a3-21f97893fe18-edited-800x340.png 800w, https:\/\/www.dragontactics.com\/wp-content\/uploads\/2026\/09\/fd7dd4c4-0187-4e38-80a3-21f97893fe18-edited-1400x594.png 1400w, https:\/\/www.dragontactics.com\/wp-content\/uploads\/2026\/09\/fd7dd4c4-0187-4e38-80a3-21f97893fe18-edited-768x326.png 768w, https:\/\/www.dragontactics.com\/wp-content\/uploads\/2026\/09\/fd7dd4c4-0187-4e38-80a3-21f97893fe18-edited-1536x652.png 1536w\" sizes=\"auto, (max-width: 1677px) 100vw, 1677px\" \/><\/figure>\n\n<p class=\"wp-block-paragraph\">ANALYSIS: The trade war waged by Donald Trump weighed on the American sportswear maker&#8217;s quarterly net income, which fell by 31%.<\/p>\n\n<p class=\"wp-block-paragraph\">A huge blow against his own side. By drastically raising U.S. tariffs on goods coming from Asia, Donald Trump has forced America&#8217;s sportswear star Nike into a deep rethink of its model. The giant, which has been losing momentum for several years, had already embarked on a tough turnaround under the leadership of Elliott Hill, who came out of retirement in October 2024 after thirty-two years with the company. This Nike veteran quickly warned that the impact of the U.S. government&#8217;s policy would be massive on the accounts. In June, when the sharply lower 2024-2025 results (fiscal year ending late May) were published, he had estimated the cost of the tariff surcharges at $1 billion. That cost has since been raised to $1.5 billion.     <\/p>\n\n<p class=\"wp-block-paragraph\">As has always been the case, and like its major competitors, the world&#8217;s leading sporting-goods maker (ahead of Germany&#8217;s Adidas) owns no factories of its own and has its products made in Asia: mainly in Vietnam (51% of the brand&#8217;s shoes and 31% of its clothing), China (17% and 15% respectively), Indonesia (28% of shoes), and Cambodia (15% of clothing). What had always been a strength, thanks to low-cost labor and limited investment, suddenly turned against the entire industry. Companies on this side of the Atlantic, more than others, tried to plead their case with the U.S. administration. In late April, the Footwear Distributors and Retailers of America had written to Donald Trump, urging him &#8220;to exempt footwear from reciprocal tariffs (\u2026). Hundreds of companies risk closing. Tens of thousands of jobs are at stake.&#8221; Without success.   <\/p>\n\n<h3 class=\"wp-block-heading\">44% of sales in the United States<\/h3>\n\n<p class=\"wp-block-paragraph\">On Thursday evening, Nike published quarterly results (September to November) showing revenue of $12.4 billion (+1%), above analysts&#8217; expectations. Sales in North America grew 9%, but China continued to struggle (-17%), as did the Converse brand (-30%). Above all, net income plunged 31%, to $792 million. &#8220;We&#8217;re making progress in the areas we&#8217;ve prioritized and remain confident in the actions we&#8217;re taking to drive our brands&#8217; long-term growth and profitability,&#8221; Elliott Hill reassured, well aware that Nike is the most exposed of all, with the United States by far its largest market (43% of sales). That&#8217;s far more than its major international rivals, starting with Adidas, which generates only 22% of its business in the U.S. And it is precisely the tariffs between the United States and Asia that are the problem.     <\/p>\n\n<p class=\"wp-block-paragraph\">After months of negotiations with the Trump administration, the additional tariffs were reduced to 19 to 20% for most Southeast Asian countries. &#8220;Nike really only has three options: cut costs by renegotiating supplier contracts or switching suppliers, cut its margin, or raise prices,&#8221; suggests Victor Gavrilov, a partner at AlixPartners. &#8220;Renegotiating with suppliers is difficult because prices are already tight, so it means cutting ranges to boost volumes per item.&#8221; Relocating production outside Southeast Asia? That&#8217;s not impossible, but it takes time. &#8220;Switching a production plant alone takes six to eight months,&#8221; the expert states. &#8220;And that&#8217;s only if there&#8217;s available capacity and the rest of the ecosystem \u2014 tier-2 suppliers \u2014 can follow.&#8221;   <\/p>\n\n<p class=\"wp-block-paragraph\">All the sportswear giants are now looking at their options. &#8220;But they won&#8217;t make hasty production changes until they see the situation as stable,&#8221; warns Victor Gavrilov. This is all the more true for Vietnam, a country that has built up unique know-how in sports-shoe manufacturing in recent years. All the major brands rely on its labor force, Nike more than Adidas but less than On.   <\/p>\n\n<h3 class=\"wp-block-heading\">&#8220;Becoming the cool brand it long was again&#8221;<\/h3>\n\n<p class=\"wp-block-paragraph\">On pricing, Nike is taking action. Beyond wanting to limit promotions, its management has chosen to raise prices selectively. But that only solves a small part of the problem: the group is bearing the brunt of the effort by squeezing its own margin. &#8220;Just as it would be unreasonable to expect a record time from a marathon runner recovering from the flu, it is unreasonable to expect Nike to post strong results while it&#8217;s only halfway through its turnaround program,&#8221; says Neil Saunders, an analyst at GlobalData.   <\/p>\n\n<p class=\"wp-block-paragraph\">The American giant was at the top for years. &#8220;For the past three to four years, it has tended to be less dynamic with its innovations, while brands like Lululemon, Hoka, and On have emerged as appealing alternatives,&#8221; notes Sandrine Zerbib, president of ZW Conseil and author, in 2022, of Dragon Tactics, on how Chinese entrepreneurs work. Nike is paying a heavy price for that today, but the situation is improving, even though the giant is not yet out of the woods, facing more demanding consumers and more agile competitors. &#8220;Its big challenge is to become the cool brand it long was, on a global scale, once again,&#8221; Sandrine Zerbib sums up.   <\/p>\n\n<p class=\"wp-block-paragraph\">The American giant brought Elliott Hill out of retirement to move forward again.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>ANALYSIS: The trade war waged by Donald Trump weighed o&#8230;<\/p>\n","protected":false},"author":2,"featured_media":2854,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[79,43,1],"tags":[],"class_list":["post-3063","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-press-en-2","category-press-release","category-uncategorized"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v28.4 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Offshoring, cutting margins... 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