How Will Steel Tariffs Impact Caterpillar?
U.S. President Donald Trump in March announced that the U.S. would levy a 25% tariff on steel imports and a 10% duty on aluminum. While Mexico, Canada, and the E.U. were exempted from this initially, this was also changed at the beginning of June. The implementation of these tariffs will no doubt increase the costs for companies like Caterpillar (NASDAQ: CAT), whose stock is down year-to-date given the negative sentiment. The industrial giant, which sells more than half of its equipment overseas, expects that these tariffs could hike both imported and domestic steel prices. Caterpillar’s Construction Industry segment, which is heavily reliant on steel prices, will be most vulnerable to these tariffs. Consequently, we expect the margins for the segment to fall roughly 100 basis points.
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