The Trump administration’s latest wave of tariffs will cost machinery and equipment giant Caterpillar Inc. an extra $100 million this quarter, executives said August 28, raising the forecast to between $1.5 and $1.8 billion for the year.
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Early this month, CEO Joe Creed and his team told analysts and investors they expected tariffs, including reciprocal measures on products from dozens of countries that were about to be enacted, would add $400 million to $500 million to Caterpillar’s third-quarter costs. In a filing with the Securities and Exchange Commission, they said that range is now $100 million higher and also raised their full-year estimate for tariff-related costs to somewhere between $1.5 billion and $1.8 billion. The midpoint of that range is $250 million higher than their forecast of a few weeks ago.
“While the company continues to take initial mitigating actions to reduce this impact, trade and tariff negotiations continue to be fluid,” the company said in its SEC filing.
Creed said early this month that those measures included cutting short-term discretionary spending, looking to source products from multiple suppliers and working to certify other products to be compliant with the USMCA trade agreement. But he stopped short of taking another step.
“I’d like to see how much we can mitigate on tariffs, specifically other ways, before we use pricing as a lever,” Creed said on a conference call discussing Cat’s second-quarter earnings.
Caterpillar finds itself relatively exposed to tariff impacts because, despite being a global business that rang up nearly $65 billion in 2024 sales, about 51,000 of its roughly 113,000 employees at the end of last year were in the United States. The company has a footprint in 25 states, where it runs 65 what Creed called “key locations.”
On the Q2 earnings call, leaders said that the company’s Construction Industries group will absorb about 55% of all tariff impacts this quarter. The Resource Industries division is expect to incur about 20% of tariff costs while the Energy & Transportation group will face the remaining 25%.
In raising their tariff cost targets, Caterpillar executives have joined several other big names. The team at Ford Motor Co., for instance, late last month added $500 million to their 2025 estimate, which now stands at $2 billion. Deere announced layoffs in the ag sector, and JCB has renounced whole good tariffs as "punitive."
More broadly, a recent survey by Endeavor Business Intelligence, the research division of Construction Equipment parent company EndeavorB2B, showed that nearly half of all companies are seeing operating costs rise by at least 10% because of the Trump administration’s tariff push.
Shares of Caterpillar (Ticker: CAT) were down nearly 3% to about $423 the morning after the company’s SEC filing. They are, however, still up more than 20% over the past six months, a move that has lifted the company’s market capitalization to about $200 billion.
About the Author
Geert De Lombaerde
A native of Belgium, Geert De Lombaerde has more than two decades of business journalism experience and writes about markets and economic trends for Endeavor Business Media publications, including IndustryWeek and FleetOwner. With a degree in journalism from the University of Missouri, he began his reporting career at the Business Courier in Cincinnati and later was managing editor and editor of the Nashville Business Journal. Most recently, he oversaw the online and print products of the Nashville Post and reported primarily on Middle Tennessee’s finance sector as well as many of its publicly traded companies.