Cummins preparing to pay tariff on own products sourced from China

The Wall Street Journal reported Monday that Cummins, Inc., is among a number of U.S.-based companies that are preparing to pay tariffs on their own goods manufactured in China when President Donald Trump’s new tariff on steel and aluminum goods takes effect in July.

The WSJ says Cummins exports light-duty engines and turbochargers from China, which are then sold to North American OEMs and the aftermarket. Beginning on Friday, July 6, all of those components will be subject to a 25 percent tariff at the U.S. border.

The company is yet to announce how it will address the tariff, and if the company will be forced to raise prices or sacrifice profit margin to combat the added import expense.

“This is a big headache,” Tony Satterthwaite, president of Cummins’s distribution business, was quoted as saying in the WSJ. “Making changes in your supply chain is not a three-week process.”

The WSJ report also notes Cummins and other U.S. manufacturers could face potential retaliatory tariffs in Canada, Mexico and the European Union for the goods they produce in America and export to those other nations.