Caterpillar Shares Plunge 3.65% on Tariff Cost Surge as $1.54 Billion Volume Ranks 43rd in US Trading

Caterpillar (CAT) fell 3.65% on Aug. 29 amid a 114.54% surge in trading volume to $1.54 billion, ranking 43rd among U.S. stocks. The decline followed the industrial equipment maker’s upward revision of 2025 tariff-related expenses to $1.5–1.8 billion from a prior $1.5 billion estimate, intensifying concerns over U.S. trade policy impacts. Analysts highlighted limited capacity for the company to offset these costs, with Morgan Stanley’s Angel Castillo noting persistent challenges in tariff pass-through for CAT and the construction equipment sector.

Broader market data showed global firms reporting cumulative annual tariff-related losses of $14.3–15.9 billion between July 16 and Aug. 20, per Reuters’ tracker. BofA’s Michael Feniger emphasized that tariff headwinds are exceeding expectations and will likely persist into Q3. While some analysts, like Langenberg LLC’s Brian Langenberg, remain cautiously optimistic about demand resilience—citing inelastic demand for heavy machinery like bulldozers—the stock’s forward P/E of 21.34, above the industry median of 18.46, reflects mixed sentiment.

Caterpillar shares have gained 20.9% year-to-date despite recent volatility. The stock has historically underperformed during tariff announcements, such as the 2024 Liberation Day tariffs, which triggered sharp declines in April. Baird’s Mircea Dobre estimated potential 2026 tariff costs of $1.1 billion for the company, with no significant mitigation expected next year. Market participants continue to monitor the interplay of high interest rates and shifting trade policies as key risks to margins.