What Trump tariffs mean to Nike’s Air Jordan 1s

Nike Air Jordan 1, in some ways, is the reputed US shoe. It is a popular sneaker line by a large American brand, built for the Homegron Basketball Legend Michael Jordan four decades ago.

But although Nike sells most of its products in America, almost all shoes are made in Asia – A region targeted by President Donald Trump’s tariff Against abroad, he accuses the Salvo of “Americans”.

A day after the announcement of the tariff, Nike shares fell 14%, which could fall on the company’s supply chain.

So what will happen for the price of Nike shoes?

It depends on how much the cost of the nike increases, if any, decides to pass the customers, if any, and how long they think the tariffs will actually be in place.

The heaviest American imports from Vietnam, Indonesia and China face some of the most heaviest American imports – between 32% to 54%.

Hope Trump may be ready to have those rates less interaction. On Friday, he said that he made a “very productive” call with the leader of Vietnam, which helped Nike shares to recover some land after falling on Thursday.

But most analysts feel that the firm prices will increase.

Swiss bank UBS estimates that the prices of goods coming from Vietnam will increase by 10% to 12% – where Nike produces half of its shoes.

Meanwhile, Indonesia and China accounts for almost all balance of their shoes production.

“Our view is how wider the list of tariffs are,” UBS analyst J Sole said in a note, the industry will realize that there are some ways to reduce the impact in the moderate period besides increasing the price. “

Morningstar’s senior equity analyst David Swartz agrees that there is a possibility of an increase in value, but says an increase in any major price will reduce demand.

He says, “This is a very competitive industry. I estimate that it will be difficult for Nike to increase prices more than 10-15%. I don’t think it can offset most tariffs,” they say.

Many other western brands such as H&M, Adidas, Gap and Lululemon will face the same prediction.

Nike is already facing a tight lower line.

Its most recent financial year was about $ 51BN (£ 39.6bn) in sales. The cost of making products including shipping, third-party profit and warehouse fee consumes only 55% revenue, giving it a healthy gross profit margin of more than 40%.

Once you add to the cost of other business functions, that profit goes away. For example, its revenue is consumed by one -third, sales and administrative expenses.

As long as you are factors in interest and taxes, the benefit of the nike becomes about 11%.

This is in all its products, as they do not break the cost separately for its different objects.

Rahul C, who established the running shoe review website Sole Review, says there are other methods that can keep Nike retail prices low.

Mr. C, who trained as a footwear designer and worked for Nike and Van in India, says that one way may be to downgrade the level of technology in shoes.

“So instead of using high-demonstrations midsole foam and construction, the injection stick to the molded eva (ethylene-vinyl acetate),” he says.

Another option will be instead of bringing a new design every three to four years to refresh the design cycle.

Shimon Seigel, managing director of BMO Capital Markets, says that most companies were looking at Wednesday’s announcement as “still away from the final conclusion”.

“I don’t think many people believe that those numbers are still dug in the stone,” they say.

Theoretically, Nike is such a big brand that it should be able to pay prices without killing its sales, but says: “Does he right now have this question and do they have that their product offers is another?”

Even before the announcement, Nike was facing a recession in sales, which had curbed his ability to command the entire price for his shoes.

Finance Head Matthew Mitra has also cited tariffs as an example of developments that were affecting consumer trust.

And Nike is much more dependent on American consumers, contributing to about $ 21.5BN of its sales in the market – almost everything that sells in its largest market in North America.

Bhavna in the US is a “important concern” for Nike because it directly affects the demand for its shoes, called Sheng Lu, a professor of fashion and apparel studies at Delaware University.

But finally he says that firms may be forced to pass the cost of levy to consumers.

“If the tariff war continues, Nike is very likely to increase prices. There is no way to absorb 30% to 50% increase in sourcing costs for brands.”

He says: “How to react to US trading partners mutual tariff policy will also have a major impact.”

China has already returned with its own 34% tariff,

A part of the argument behind Trump’s tariff policy is to build more companies in the US.

However, Prof. Lu Nike, or other companies, soon, soon at any time at any time “due to the complexity involved in footwear manufacturing”.

It involves the time required to consider a long list of factors, when it is decided that their products have to be sourced – quality, cost, market speed and various social and environmental compliance risks “.

Matt Power of the Power Advisory Group says that the American textile mills will “have difficult and expensive (for Nike) to produce back to the US” difficult and expensive (for Nike).

Mr. Power said: “This infection, if followed, will take years and significant investment will be required.”

Nike did not respond to the BBC requests for comments for this article.

We also approached 30 suppliers in Asia but no one responded.

Additional Reporting by Natalie Sharman in New York