Nike Claims the “Consumer Gets Hurt” in a Trade War with China. True or False?

With the China tariff up 25%, we’re constantly being told this will hurt the consumer and that it’s why inflation is rising (up 1.5% in April from 1.4% in March accounting to the Commerce Department). The Consumer Price Index increased 0.3% last month after moving up 0.2% in March. If the trade war with China trade is so bad where is the inflation, where are the price hikes?

Nike and other companies are saying the “consumer will get hurt” with the China and Mexican tariffs, but is this really true? Bear in mind that Nike is not neutral in this fight as it has large investments in China and as a global manufacturer has strong ties to both countries.

Looking under the hood we see almost every major shoe firm, just like Nike, that has a large amount of manufacturing in China, tells its investors that they moved most of their production away from China to protect from possible tariffs. In 2017 Nike production in China was only 19% of their world wide production and not all of those products are imported to the United States. What they are not telling us is that they could reroute the majority of the China production to other countries or rework it so that 100% of the shoes and apparel they manufacture in China are sold there. In their 3rd quarter conference call Nike claimed: “we delivered 24% ‘currency-neutral’ revenue growth in Greater China.” Countries like Vietnam that already make 44% of Adidas shoes will be rerouting the majority of their global production to the US. Nike claimed in big bold headline in a Newsweek piece that:

Nike Warns Price of Sneakers Could Skyrocket If Trump Imposes Tariffs on China


Notice Nike and Newsweek said could.  I wish companies and reporters were honest with us, the consumers, that they know the term “skyrocket” is used by the Marketing and Government Affairs Departments to move us politically. I listen to a lot of major company earnings calls. Almost every company admitted they had a way to rerout the end products so they would not to be caught in the trade war, but they don’t tell the general public.

Nike and Adidas wrote a open letter to President Trump claiming a Chinese tariff would be:

‘catastrophic for our consumers, our companies and the American economy as a whole.’

If this is true then why on their conference call is Nike telling stock holders they have significant strategies to reduce the impact of any possible China tariff, while at the same time screaming to the public how bad this is going to be?

Puma CEO Bjorn Gulden said on an April 26 conference call that Puma SE has moved significant production to countries like Vietnam and Bangladesh. The German company’s leader said they are continuing to make products in China but for Chinese consumers only. Puma produced about 24% of its products in China. The CEO also claimed:

“To be honest, the trade war between China and the U.S. is a little bit of a gift…We can produce targeted products for the Chinese market in China, which saves for duty and other costs.”

So if Puma could produce about 24% of it worldwide production in China and see it as a gift, how can Nike claim the sky is falling with such strong growth in China and about the same amount of its global production in China as Puma? Nike is likely following the same strategy as Puma and keeping the vast majority of its China production for the China market. If they have any overflow, they could send it to many other countries where there is no tariff. I question if a single product, made in China by Nike, will ever have a 25% tariff applied to it and be sold in the United States.

With inflation so tame at 1.5%, I’m not able to see any inflation on Nike prices listed on Puma and other shoe companies have already admitted that the China tariff is either a neutral event for them or a benefit. It might be fair for an American to conclude that Nike is being political.

When it comes to believing scary tariff claims from Nike, I’m “just not doing it.”

Only $1/click

Submit Your Ad Here

Jay Black

I try to write fact based articles that most people won't. Lets improve this world including both Corporate and Government malfeasance. If you have a lead about a ethical failure please comment on my article or in many of my comments.

Leave a Reply