90-Day Tariff Reprieve Papers Over the Cracks with Nike Stock (NKE)

Following a temporary easing of the tit-for-tat trade war, Nike Inc. (NKE) has seen a modest rebound from its 52-week lows in April. As a company heavily reliant on overseas manufacturing, Nike remains particularly sensitive to tariff policy.

Last week, the U.S. and China reached a 90-day agreement to reduce tariffs, lowering U.S. duties on Chinese imports from 145% to 30%, which helped fuel a broader market rally. While this development is a positive step, Nike faces headwinds related to revenue and gross margin pressure, leading me to maintain a cautiously neutral stance on the stock.

Trade Deal Impact on NKE Stock

Nike is infamous for its offshore manufacturing in Vietnam, Indonesia, and China. In this vein, its stock is sensitive to tariffs and rumors of tariffs. Before the most recent agreement was reached, Nike faced tariffs between 32% and 54%. In its fiscal 2025 third quarter results, Nike posted revenues of $11.3 billion (down 9%) and a gross margin of 41.5% (down 330 basis points). 

As shown in the image above, Nike has struggled to fully recover from the pandemic, with revenue and profit margins under sustained pressure for nearly two years. In response, the company launched its “Win Now” strategic priorities to revitalize its brand and refocus on core categories like running and training apparel.

The recent tariff reduction agreement provides Nike with a three-month reprieve—enough time to rebuild inventory without incurring prohibitively high import costs. It’s important to consider the industry’s economics: while a pair of shoes may cost $20 to produce overseas and retail for over $100 in the U.S., Nike’s actual profit margins remain relatively thin, making tariffs a significant threat to its bottom line.

Although Nike has made progress in diversifying production beyond China, mainly by shifting much of its manufacturing to Vietnam, the company remains heavily reliant on Asia. This geographic concentration continues to expose it to geopolitical risks, especially given the current U.S. administration’s firm stance on trade, even with allied nations. Ultimately, domestic manufacturing remains an unlikely alternative, as the associated costs are not aligned with Nike’s current business model.

NKE Faces Several Challenges

Nike is also dealing with more significant issues, like competition. Brands like On and Hoka are gaining market share. Nike’s brand doesn’t appeal to younger generations like it did in the past, as these generations gravitate towards brands they see as authentic and aligned with their values.

Notably, the trade deal is temporary. Washington and Beijing are expected to continue negotiations for a long-term trade deal. Until this happens, tariffs remain a major uncertainty for Nike. Critically, Nike’s manufacturing footprint remains vulnerable, and you would think these recent events will spur actual geographical diversification.

Lastly, the financial pressures of recent quarters limit Nike’s ability to invest in product innovation and marketing. It’s a distraction. The company cannot focus entirely on brand revival while challenged with supply chain contingency planning. 

Is Nike Stock a Buy or Sell?

On Wall Street, NKE sports a Moderate Buy consensus rating based on 14 Buy, 15 Hold, and zero Sell ratings in the past three months. NKE’s average stock price target of $77.21 implies a potential upside of 22% in the next twelve months. 

See more NKE analyst ratings

Earlier this month, analyst Lorraine Hutchinson from Bank of America gave NKE a Buy rating with a price target of $80. The analyst is optimistic about Nike’s ability to reduce costs and return to pre-COVID margins. “The company’s leadership has shown early success in categories like running, and they are effectively engaging with wholesale partners to gather feedback on upcoming products. Nike’s marketing efforts, including major events like the Super Bowl and All-Star weekend, are expected to drive brand visibility and sales momentum,” said the analyst in a research note.

However, not everyone is bullish on NKE. Analyst Nick Anderson from Berenberg rates NKE as a Hold with a price target of $58. This analyst believes Nike has a long road ahead to restore growth and margins. He also acknowledges that Nike’s “strong balance sheet and undemanding EV/sales valuation provide downside protection.” 

Clearly, Nike has a lot of work to do, but its strong financial backing and conservative valuation give investors a good starting point. 

Nike Faces Deeper Challenges Despite Temporary Tariff Relief

In conclusion, the renewed focus on tariffs under President Trump’s second term has pressured Nike at an already challenging time. While the recent tariff reduction agreement with China offers temporary relief, it may prove short-lived. Notably, Nike had already been experiencing declining revenues and losing market share even before the latest wave of trade tensions.

To its credit, the company retains some flexibility and time to respond, as many Wall Street analysts have noted. Its relatively conservative stock valuation suggests that much of the current risk is already priced in. However, I remain cautious due to a more fundamental concern: Nike appears to be falling behind in connecting with younger consumers — a trend that could have lasting implications if not addressed.