Tariffs will cost Caterpillar $200 million, so it’s going to raise its prices

Hassan Sarbakhshian | Bloomberg | Getty Images

A worker operates a Caterpillar Inc. 336D hydraulic excavator during construction on Route 7 near Falls Church, Virginia.

Big exporter Caterpillar gave a figure on how much tariffs will affect its bottom line.

In its second-quarter earnings statement, the Dow Jones Industrial Average member said Monday it expects recently imposed tariffs to shave off $100 million to $200 million from its bottom line in the second half of the year. The company also raised its full-year earnings forecast despite the increased costs.

Caterpillar’s announcement comes after the U.S. slapped tariffs on $34 billion of Chinese goods earlier this month. The U.S. has also implemented tariffs on steel and aluminum imports from Mexico, Canada and the European Union. They have retaliated against those levies with tariffs of their own.

Despite the higher costs related to tariffs, Caterpillar increased its adjusted earnings per share forecast to a range of $11 to $12 from $10.25 to $11.25. The new guidance represents an adjusted profit range of $6.6 billion to $7.2 billion.

So the higher tariff costs represent about 3 percent of the company’s expected full year profits.

It also reported record second-quarter earnings per share and revenue that topped analyst expectations and said it repurchased $750 million in shares in the quarter. The results sent Caterpillar’s stock up by about 1 percent.

“However, the company intends to largely offset these impacts through announced mid-year price increases and using the Operating & Execution Model to further drive operational excellence and structural cost discipline,” Caterpillar added in its statement.