CMI · 10-Q · 2026Q3 · Full report

Trade Policy and Tariffs

CUMMINS INC · 2026-11-05 · Importance 47 · Surprise 60 · In source text

The U.S. Supreme Court ruled on February 20, 2026, that tariffs imposed under the International Emergency Economic Powers Act on goods imported into the U.S. were unauthorized; new tariffs were subsequently imposed under other statutes. Cummins says the global trade environment has created market volatility and uncertainty around demand, supply availability and product costs, and that its mitigation actions included government tariff offset programs, supplier engagement, alternative sourcing and customer cost recovery. Net tariff costs after mitigation and U.S. government refunds, net of amounts returned to customers, were immaterial to profitability and operating cash flows in the three and nine months ended September 30, 2026, but management warns that future tariff costs and market volatility could materially adversely affect results, financial condition and cash flows.

Key facts

• The U.S. declined to extend the USMCA on July 1, 2026; Cummins is monitoring negotiations and cannot yet determine the impact of possible revisions. source
• On February 20, 2026, the U.S. Supreme Court ruled that U.S. tariffs imposed under IEEPA on goods imported into the U.S. were unauthorized, after which new tariffs were imposed under different statutes. source
• The net financial impact of tariffs, after mitigation and U.S. government refunds net of amounts to be returned to customers, was immaterial to Cummins' profitability and operating cash flows in the three and nine months ended September 30, 2026. source
• Cummins' primary tariff-related risks include reduced global goods movement affecting freight activity, increased supplier and end-user costs, and uncertainty about supply availability. source
• Cummins is pursuing tariff mitigation through government offset programs, supplier engagement, alternative sourcing, and customer agreements to recover tariff-related costs. source
• Continued and increasing tariff costs, the effectiveness of mitigation efforts, and ongoing market volatility could materially and adversely affect Cummins' future results of operations, financial condition and cash flows. source
• Cummins says ongoing global trade volatility creates uncertainty about future capital-goods demand, supply-chain impacts and product costs; it is taking supply-chain mitigation steps and working with customers to pass through incremental costs. source
• In 2025, the U.S. imposed tariffs on certain countries and products, followed by retaliatory tariffs and other trade actions against U.S. goods and services. source

Impact estimates