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In 1977, Nike received a $25 million bill from the U.S. government for three years of customs duties. The bill was based on an old duty-assessing method called the American Selling Price (ASP). According to the ASP, import duties on nylon shoes must be 20% of the manufacturing cost of the shoe, unless there's a similar shoe manufactured in the U.S., in which case the duty must be 20% of the competitor's selling price. This bill posed a significant threat to Nike's financial stability as it was almost equivalent to their entire sales number for the year. The broader implications of this case highlight the potential financial risks businesses can face due to changes in customs duties and trade regulations. It also underscores the importance of understanding and complying with international trade laws and regulations.
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Perhaps the scariest and most audacious example of changing the story started in 1977 with an envelope. It didn't look like much, that envelope, but inside was something that started me shaking: a bill from the U.S. government for $25 million. The government claimed we owed three years of customs duties because of some obscure old duty-assessing method called the American Selling Price. If this was for real, we were in trouble; no way we could pay a $25 million assessment. That was almost our entire sales number for the year; and even if we managed to find a way to pay the bill, we couldn't keep paying such hefty duties every year. Everything we had achieved would be destroyed. The ASP said that import duties on nylon shoes must be 20% of the manufacturing cost of the shoe; unless there's a similar shoe manufactured in the U.S., in which case the duty must be 20% of the competitors selling price. And that's what our competitors had done: make a few shoes in the U.S., get them declared...
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The iconic Nike sporting goods company started over 50 years ago as a ‘crazy idea’ in the mind of a young runner in Oregon. Shoe Dog is Phil Knight’s...
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