Illinois, U.S. - Caterpillar Inc., a construction equipment manufacturer, warned that recently imposed tariffs will significantly impact its financial performance in the second half of 2025, with the potential to cut profits by as much as $1.5 billion over the year.
Shares of Caterpillar, widely regarded as a bellwether for the industrial economy, slipped about 1% following the update. The company also projected a third-quarter tariff impact of $400 million to $500 million.
Mr. Joe Creed, CEO of Caterpillar, said, “Impact of tariffs was around the top end of our estimated range for the quarter and it's likely to be a more significant headwind to profitability in the second half of 2025.”
The companies worldwide reported a combined loss of $12.1 billion to $13.4 billion between July 16 and August 1, with industrial and manufacturing firms accounting for the bulk of the hit. U.S. President Donald Trump has defended the tariffs as a measure to address trade imbalances and revive domestic manufacturing.
Despite raising prices to counter rising costs, Caterpillar saw weaker second-quarter margins as U.S. construction spending slowed under the pressure of higher interest rates. Revenue in Asia Pacific slipped 2% to $2.89 billion, while North America sales over half of the company’s total also dropped 2% to $8.9 billion. Overall sales and revenue fell 1% year-on-year to $16.7 billion, and adjusted profit came in at $4.72 per share, missing analyst estimates of $4.90.
Caterpillar expects 2025 sales and revenue to be slightly higher than 2024, with growth led by demand for power generation equipment to support data centers. Analysts noted data center-related sales could remain a bright spot, but broader growth across operating segments will be needed.
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