Nike is locked in a row over “political correctness” that has cost it a $US1 million ($A1.4 million) grant to help build a factory in Arizona.

The world’s largest sportswear-maker had been about to release a sneaker that featured an old US flag that has been embraced by white nationalists.

But it announced on Monday it would not sell the runners – following complaints from former American football player Colin Kaepernick.

The special edition Air Max 1 Quick Strike Fourth of July trainers are emblazoned with the “Betsy Ross flag”. They were already selling for more than $1500 online before they were withdrawn.

The Betsy Ross flag has a circle of 13 stars representing the first US colonies. It was created during the American Revolution and later adopted by the American Nazi party.

Kaepernick, who is sponsored by Nike, had asked the company to withdraw the runners. He said he and others considered the flag offensive because of its connection to an era of slavery, the Wall Street Journal reported

On Monday, a Nike spokesperson said it had “chosen not to release the Air Max 1 Quick Strike Fourth of July as it featured an old version of the American flag”.

The company said its move – two days before the US celebrates its biggest holiday, Independence Day, on July 4 – was “based on concerns that it could unintentionally offend and detract from the nation’s patriotic holiday”.

But Arizona state governor Doug Ducey condemned the decision, accusing the company of bowing to political correctness.

In response, he said on Tuesday that he would withdraw financial incentives offered to Nike’s manufacturing plant in Arizona.

Today was supposed to be a good day in Arizona, with the announcement of a major @Nike investment in Goodyear, AZ. THREAD—>
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— Doug Ducey (@DougDucey) July 2, 2019

“Words cannot express my disappointment at this terrible decision. I am embarrassed for Nike,” Mr Ducey, a Republican, said on Twitter.

“Instead of celebrating American history in the week of our nation’s independence, Nike has apparently decided that Betsy Ross is unworthy, and has bowed to the current onslaught of political correctness and historical revisionism.”

Mr Ducey said he had ordered the State’s Commerce Authority to withdraw all financial incentives for the company’s plant.

Nike was planning to build a $US185 million plant in Goodyear, Arizona, that would employ more than 500 people.

Nike did not immediately respond to requests for comment about Mr Ducey’s decision.

Colin Kaepernick in the 2018 Nike ad. Photo: Getty

Kaepernick last year became the face of Nike’s advertisement marking the 30th anniversary of the company’s “Just Do It” slogan, sparking similar outrage.

The ad revived a raging debate in the US that started in 2016 when Kaepernick, then with the San Francisco 49ers, began kneeling to protest multiple police shootings of unarmed black men.

Protesters responded by burning their Nike shoes, investors sold shares and some consumers demanded a boycott.

-AAP