By Dean Seal

Caterpillar expects to face $250 million to $350 million in additional costs this quarter from the global tariff war launched by the Trump administration.

The machinery maker said Wednesday that the forecast accounts for short-term actions it has already taken to mitigate the incoming cost storm. Caterpillar is looking at longer-term solutions, but hoping to first get a clearer picture of how the tariff fight will shake out, executives said Wednesday on a call with analysts.

"Many of these actions require more time to implement, are more difficult to reverse and, therefore, require more clarity and certainty on the long-term environment around tariffs," Chief Operating Officer Joe Creed said.

About half of additional costs will be incurred in Caterpillar's construction industries segment, with a quarter hitting its resource industries unit and the rest affecting the energy and transportation business.

Trade deals or any other easing in the current spate of levies could profoundly reduce the anticipated cost headwind, Chief Financial Officer Andrew Bonfield said. About half of the new duties affecting Caterpillar are tied to China, which faces a 145% import tariff.

If the current tariff spate stays in place, sales would likely decline this year instead of hold flat and margins would be narrower, Caterpillar said.

The comments came after Caterpillar recorded lower earnings in the first quarter from a drop in volumes and its pricing power.

The Irving, Texas, company posted a profit of $2 billion, or $4.20 a share, compared with $2.86 billion, or $5.75 a share, in the same quarter a year earlier.

Stripping out one-time items, adjusted earnings were $4.25 a share. Analysts polled by FactSet had been expecting $4.35 a share.

Total sales and revenue of $14.25 billion was down 10% from a year ago and below analysts' projections of $14.72 billion.

A decline in volumes, largely from changes in dealer inventories, cut more than $1 billion from the top line while unfavorable price changes took another $250 million, Caterpillar said.

Write to Dean Seal at dean.seal@wsj.com

(END) Dow Jones Newswires

April 30, 2025 10:24 ET (14:24 GMT)

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