Caterpillar’s shares lost more than three per cent in morning trading on Friday, a day after the heavy-equipment maker forecast higher tariff-related expenses for 2025, as companies scramble to assess the impact of shifting U.S. trade policy.
Industrial machinery makers are facing higher costs and sluggish demand from U.S. President Donald Trump’s tariffs, as well as high interest rates.
“Our concern remains that CAT and the construction equipment group have thus far exhibited little to no ability to pass through tariffs,” said Angel Castillo, analyst at Morgan Stanley.
Caterpillar now expects a tariff hit of US$1.5 billion to $1.8 billion this year, up from its prior forecast of up to $1.5 billion.
Bank of America Securities analyst Michael Feniger said the headwinds were not limited to the company.
“A theme through earnings is that tariff headwinds are higher than expected, and this continues to rise into (the) third quarter,” Feniger said.
Global companies that have reported between July 16 and Aug. 20 have forecast a combined annual financial hit of $14.3 billion to $15.9 billion and nearly $15 billion for 2026, Reuters tariff tracker shows.
Baird Equity analyst Mircea Dobre estimated that tariffs could cost Caterpillar an additional $1.1 billion in 2026. He also said he does not assume meaningful mitigation next year.
Meanwhile, Brian Langenberg, analyst at Langenberg LLC, was relatively optimistic about demand. “Annoying, but not a killer. Demand is demand, and if someone needs a bulldozer they will buy it and absorb the tariffs,” he said.
“While we believe cycle transition will overpower tariff-sentiment, volume growth is the clear next catalyst.” said Oppenheimer analyst Kristen Owen.
Caterpillar’s shares trade at about 21.34 times their forward profit estimates, above the industry median of 18.46. They have risen 20.9% so far this year.
(Reporting by Anshuman Tripathy and Aishwarya Jain in Bengaluru; Editing by Pooja Desai)
