Newly announced tariffs will reportedly escalate Caterpillar's Q3 expenses by an estimated $100 million, according to top Caterpillar officials.
In a recent SEC filing, Caterpillar Inc. (Ticker: CAT) announced an increase in its tariff-related costs estimate for the full year of 2025. The midpoint of the new estimate is $250 million higher than the previous forecast, with the company now anticipating costs between $1.5 billion and $1.8 billion.
The resource industries division of Caterpillar is expected to incur approximately 20% of these costs this quarter, while the construction industries group will absorb around 55%. The energy and transportation group will face approximately 25% of the tariff impacts this quarter.
Caterpillar's CEO, Joe Creed, mentioned that the tariff measures also include reciprocal measures on products from dozens of countries. The company has taken steps to reduce the impact of tariffs, such as 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.
However, no additional specific steps have been mentioned in the text to mitigate the tariff impacts beyond these measures. The company's shares were down nearly 3% to about $423 the morning after the filing.
The market capitalization of Caterpillar currently stands at around $200 billion, and the company's shares have increased more than 20% over the past six months. It's worth noting that the management of Caterpillar has not publicly announced any cost increases for 2025 related to collective bargaining issues for any other company.
A survey by Endeavor Business Intelligence revealed that nearly half of all companies are experiencing operating costs rising by at least 10% due to the Trump administration's tariff push. Ford Motor Co. has increased its 2025 tariff cost estimate by $500 million, now standing at $2 billion.
Caterpillar's SEC filing states that trade and tariff negotiations continue to be fluid, emphasising the ongoing uncertainty in this area. The initial forecast for tariff-related costs for Caterpillar's third quarter was between $400 million and $500 million, but it has now increased to between $500 million and $600 million.
