Caterpillar Warns Up to $1.5 Billion Tariff Cost Hit in 2025

Caterpillar reported a slight decline in second-quarter 2025 sales and profits, impacted significantly by President Donald Trump's tariff increases, which the company estimates will cost between $1.3 billion and $1.5 billion this year. Despite a 1% drop in sales and a 2.6% decrease in operating profit margin year-over-year, Caterpillar's CEO Joe Creed noted that results met or exceeded expectations, although the tariff impact hit the high end of projections and is expected to worsen in the second half of the year. The company's Energy & Transportation segment showed growth driven by demand for data center and energy project equipment, offsetting weaknesses in construction and resource industries. Caterpillar expects full-year 2025 sales to be slightly higher than in 2024, with moderate sales growth forecasted for the third quarter despite ongoing tariff-related cost pressures. The company has implemented initial mitigation strategies but awaits more certainty on trade negotiations to determine longer-term actions. Overall, tariffs have driven up manufacturing costs and compressed profit margins, while a slowdown in U.S. construction spending has dampened demand for some equipment segments.