Caterpillar projects tariffs could cost the company up to $1.5 billion in 2025
Caterpillar CFO Andrew Bonfield told investors on a call Tuesday that the net impact of tariffs on Caterpillar this year will be between $1.3 billion and $1.5 billion.
The Texas-based manufacturer, which has a heavy presence in the Peoria area, posted a 1% decrease in sales and revenues in Q2 compared to this time last year and a 2.6% decrease in operating profit margin.
Profits per share fell to $4.62 in the second quarter compared to $5.48 last year. Adjusted profit shares were $4.72 this quarter, down from $5.99 last year.
Caterpillar CEO Joe Creed said these numbers all met or went above Caterpillar's expectations for the quarter but told investors on the call that the impact of tariffs hit the high end of Caterpillar's estimates and the impact of tariffs on their numbers was expected to grow in the second half of the year.
More: Why former CEO has 'confidence' Caterpillar will be in Peoria for 'a very long time'
The Trump administration has been haphazardly negotiating trade deals with nations around the globe, many of which include increases in tariff rates on goods. They have been subject to change as the administration has changed the terms and numbers of deals as negotiations progress.
Creed told investors on Tuesday that Caterpillar has deployed some "initial mitigation" efforts to curb the impact of tariffs but added the company is "considering all options" as they await more "sufficient certainty" on tariffs.
In response to an investor question on the call, Creed said that Caterpillar's unique global supply chain has added complexity to the situation but he said Caterpillar is still waiting on more certainty and is still working to fully understand the latest tariff announcement from the government.
On July 31, Trump signed an executive order that placed reciprocal tariffs on 70 countries at rates ranging from 15% to 41%. Those tariffs are expected to go into place on Aug. 7.
Caterpillar's numbers were also lower in the first quarter of 2025 as tariffs have increased costs on the global manufacturer. In April, Creed told investors on a call that he expected tariffs to have a cost headwind of between $250 million and $350 million in Q2.
Bonfield said Tuesday the tariff impact in the third quarter is expected to grow to $400 million to $500 million. Roughly 20% of the tariff impact will be on resource industries and 25% will be on transportation.
The decrease in sales and revenues was because of "unfavorable price realization of $414 million," Caterpillar said.
Despite the negative impact of tariffs, demand remains high and backlog at Caterpillar continues to grow, signaling positive markers for Caterpillar, Creed and Bonfield told investors on Tuesday.
This article originally appeared on Journal Star: Caterpillar earnings fall in second quarter amid Trump tariff hikes
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