Illustration: Lazaro Gamio/Axios

The CEOs of IBM, JPMorgan and Cummins, the major engine manufacturer, have a gloomy outlook on what’s ahead for U.S. business if President Trump doesn’t back down on tariffs.

Why it matters: The executives said at a Business Roundtable event Wednesday that conflict with China is prompting decisions with long-term consequences — like how to shift supply chains — and the effects may show up in the economy, as companies rein in plans for spending and hiring.

  • Tom Linebarger, CEO of Cummins: "The taxes from tariffs have now outgrown the benefits from the tax reform act. Our net taxes are higher."
  • Jamie Dimon of JPMorgan Chase: "I think the biggest self-inflicted risk to growth today would be trade going south."
  • Ginni Rometty, IBM CEO: The "biggest risk, generally speaking, for businesses is when there is too much uncertainty."

Details: Cummins has already sacrificed business because of trade tensions between the U.S. and China, plus the company is reeling from uncertainty as the USMCA — the proposed replacement for NAFTA — hangs in the balance.

  • "We export a small number of engines from China, and we could not find a new source for those," Linebarger said. "We essentially lost that business."

The backdrop: The trade war is ramping up at a time when the juice from the tax cuts looks to be fading and the economic cycle is feared to be nearing an end.

  • Per Quartz, Cummins will take a $150 million hit from the tariffs on an annualized basis which would wipe out the company’s gains from the tax cut, Shannon Kiely Heider, the company’s director for international government relations, said.

What they're saying:

  • Linebarger: "In some cases, we have tried to find suppliers outside of China that can supply us the same goods, because it's been sustained long enough that we can find new suppliers. The biggest challenge with finding new supply locations is it takes time."
  • Rometty: "For us it did not make a change. It was just re-insuring where we had different and multiple sources."

What's next? The CEOs are not looking to the G20 Summit in Japan in late June as a watershed moment.

  • "I don't think anyone expects [a deal with China] by June 29," when Trump and Chinese President Xi Jinping are set to meet at the gathering of the world's leaders, Dimon says.
  • "We don't see the G20 as any kind of milestone other than, of course, I hope the two meet and talk and keep their relationship open," Linebarger says.

Go deeper: Business "freak out" spurs plans to tame Trump on trade

Go deeper

Updated 1 min ago - Politics & Policy

Coronavirus dashboard

Illustration: Eniola Odetunde/Axios

  1. Global: Total confirmed cases as of 6:30 a.m. ET: 30,199,007 — Total deaths: 946,490— Total recoveries: 20,544, 967Map
  2. U.S.: Total confirmed cases as of 6:30 a.m. ET: 6,675,593 — Total deaths: 197,644 — Total recoveries: 2,540,334 — Total tests: 90,710,730Map
  3. Politics: Former Pence aide says she plans to vote for Joe Biden, accusing Trump of costing lives in his coronavirus response.
  4. Health: Pew: 49% of Americans wouldn't get COVID-19 vaccine if available today Pandemic may cause cancer uptick The risks of moving too fast on a vaccine — COVID-19 racial disparities extend to health coverage losses.
  5. Business: Retail sales return to pre-coronavirus trend.
Mike Allen, author of AM
33 mins ago - Politics & Policy

Scoop: Mike Bloomberg's anti-chaos theory

CNN's Anderson Cooper questions Joe Biden last night at a drive-in town hall in Moosic, Pa., outside Scranton. Photo: CNN

Mike Bloomberg's $100 million Florida blitz begins today and will continue "wall to wall" in all 10 TV markets through Election Day, advisers tell me.

Why it matters: Bloomberg thinks that Joe Biden putting away Florida is the most feasible way to head off the national chaos we could have if the outcome of Trump v. Biden remained uncertain long after Election Day.

Biden's hardline Russia reset

Photo Illustration: Eniola Odetunde/Axios. Getty Images photos: Mark Reinstein

When he talks about Russia, Joe Biden has sounded like Ronald Reagan all summer, setting up a potential Day 1 confrontation with Russian President Vladimir Putin if Biden were to win.

Why it matters: Biden has promised a forceful response against Russia for both election interference and alleged bounty payments to target American troops in Afghanistan. But being tougher than President Trump could be the easy part. The risk is overdoing it and making diplomacy impossible.