TLDRs;
- Nike stock edges lower as U.S. global tariffs rise to 15%.
- Section 122 surcharge kicks in Tuesday, adding investor uncertainty.
- Analysts caution margins could face pressure despite prior IEEPA relief.
- Apparel sector shows mixed performance, highlighting uneven market response.
Nike Inc (NYSE: NKE) is set to start the week under the spotlight after U.S. President Donald Trump announced a hike to global tariffs on imports, raising the rate from 10% to 15%.
The increase, authorized under Section 122 of the Trade Act of 1974, is scheduled to take effect at 12:01 a.m. EST on February 24 and will last for 150 days.
Friday’s trading showed a modest dip for Nike, with shares closing at $65.40, down 0.32% from the previous session. Investors are closely watching how the new levy will affect costs, margins, and pricing strategies, particularly since most of Nike’s footwear and apparel is manufactured overseas.
Tariff Timing Adds Pressure
The Section 122 tariff is rarely invoked, and the timing of its implementation could influence short-term trading decisions. Nike’s investors now face the first opportunity to react after the weekend announcement. The new tariff follows a Supreme Court decision that invalidated previous authority under the International Emergency Economic Powers Act (IEEPA), which analysts had seen as a potential risk for margins.
The White House clarified that the ad valorem surcharge applies to imports’ assessed value, with certain exceptions for products already shipped or meeting specific criteria. However, full guidance on exemptions and enforcement could still shift, leaving brands like Nike navigating a complex regulatory environment.
Margin Outlook and Analyst Views
Jefferies analysts noted that the Supreme Court’s overturning of IEEPA had initially presented a “meaningful margin tailwind” for consumer discretionary companies, including Nike. Previously, a 7.7% tariff risk had been factored into fiscal 2026 guidance. With IEEPA tariffs removed, potential margin gains were expected.
Now, the reinstated Section 122 tariff introduces fresh uncertainty.
Wendy Cutler, former U.S. trade official and senior vice president at the Asia Society Policy Institute, highlighted that “the uncertainty just gives enormous additional leverage beyond the actual tariffs,” underscoring that market responses may reflect both potential costs and policy unpredictability.
Industry-Wide Effects
The broader apparel market displayed divergent trends in Friday’s session. Lululemon Athletica rose roughly 2.4%, Under Armour climbed about 5.2%, and VF Corp added approximately 4.5%. Nike, in contrast, recorded a minor drop of 0.3%, reflecting investor caution ahead of the new tariff’s implementation.
Economists from the Penn-Wharton Budget Model also flagged the potential that over $175 billion in U.S. tariff collections might need to be refunded, creating complications for both companies and suppliers. This ongoing policy uncertainty could influence retail pricing, profit margins, and consumer spending patterns over the coming months.
Looking Ahead
Nike is scheduled to release its next earnings report on March 19, providing the first formal opportunity to update guidance and clarify how tariffs are affecting margins. Investors and analysts will be watching closely for any adjustments to pricing strategies or supply chain shifts that may offset the impact of the new global surcharge.
With trade policy once again at the forefront, Nike’s stock performance in the coming weeks will serve as a bellwether for how consumer brands navigate unexpected import tax changes and the broader U.S. trade environment.
Get 3 Free Stock Ebooks
Discover top-performing stocks in AI, Crypto, and Technology with expert analysis.
- Top 10 AI Stocks - Leading AI companies
- Top 10 Crypto Stocks - Blockchain leaders
- Top 10 Tech Stocks - Tech giants
