Photographer: Luke Sharrett/Bloomberg

Steel Tariffs Scare Caterpillar Even If Trade War Not a Concern

  • CFO says higher steel costs would hurt the machinery giant
  • Halverson downplays risk of U.S. policies triggering trade war

Caterpillar Inc. isn’t concerned that the Trump administration’s policies will ignite a trade war but it is worried they could push up the cost of steel used to build those iconic yellow bulldozers.

The world’s biggest construction and mining machinery maker reported surging earnings on Thursday and delivered a bright outlook for global growth. But investor enthusiasm for its prospects is being curbed in a week in which European Central Bank President Mario Draghi attacked the U.S. Treasury Secretary’s comments on the dollar and China criticized the U.S.’s decision to place tariffs on solar-panel imports.

Caterpillar is projecting higher than expected earnings for 2018. Bloomberg’s Taylor Riggs reports.

(Source: Bloomberg)

In a telephone interview Thursday, Chief Financial Officer Brad Halverson said that while he’s not concerned about that, he did say Caterpillar has actively worked with the administration to modernize some trade agreements.

“We’ve tended to believe that the parties will work things out and the rhetoric will work things out and come back to a balance,” he said. “We’re not concerned about a trade war at this time.”

Halverson also said the ongoing discussions about potential tariffs or quotas that President Trump could implement on steel imports are a concern of the company.

“If we have a significant price increase, that would put us at a competitive disadvantage," he said.

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