⚠ Trade Policy Is Set ElsewhereHigh threat

Caterpillar (CAT) — threat to the moat

A cost of more than $2 billion a year in Caterpillar's accounts is set by governments, and a court refund does not stop them setting a new one.

A cost of this size is decided by governments. Its risk factors warn that "more restrictive trade policies" could negatively affect its business1, and the last eighteen months showed how fast the rules can change: tariffs imposed in 2025, an IEEPA portion ruled unauthorized in February 2026, refunds claimed through a new customs system in the second quarter2.

Tariff costs by segment, Q3 2026 guidance (%)50Construction Industries25Power & Energy25Resource IndustriesCaterpillar Form 10-Q Q2 2026; about $600M expected in Q3
Half lands on construction.

The company's outlook does not include any additional IEEPA tariff recoveries in the second half of 20263. Any replacement tariffs under other laws would come on top of the roughly $2.2 billion already expected4.

Caterpillar manufactures across many countries, which spreads the exposure but also means that almost any change in trade policy touches some part of its supply chain.

The refund process itself is new. During the second quarter of 2026, customs authorities launched a system that enabled the submission of certain IEEPA refund claims5, and Caterpillar recorded its expected recoveries. The company says its outlook includes no further recoveries6, so any additional refunds would be a gain and any new tariffs a cost.

The quarterly tariff figure is the gauge. A third-quarter cost well above the $600 million guided7 would say new tariffs are replacing the ones the court removed.

References
  1. ReportedIts risk factors warn that "more restrictive trade policies" could negatively affect its business, and the last eighteen months showed how fast the rules can change: tariffs imposed in 2025, an IEEPA portion ruled unauthorized in February 2026, refunds claimed through a new customs system in the second quarter.
    Caterpillar Form 10-K for fiscal 2025 - Item 1A risk factors. — FY2025 · publ. 13 February 2026 · source ↗
  2. ReportedIts risk factors warn that "more restrictive trade policies" could negatively affect its business, and the last eighteen months showed how fast the rules can change: tariffs imposed in 2025, an IEEPA portion ruled unauthorized in February 2026, refunds claimed through a new customs system in the second quarter.
    Caterpillar Form 10-Q for the quarter ended 30 June 2026 - backlog, outlook, tariffs, dealer inventory, balance sheet and the RPMGlobal acquisition - MD&A: order backlog, dealer inventory, tariffs, IEEPA recoveries and the 2026 outlook. — Q2 2026 · publ. 5 August 2026 · source ↗
  3. ReportedThe company's outlook does not include any additional IEEPA tariff recoveries in the second half of 2026.
    Caterpillar Form 10-Q for the quarter ended 30 June 2026 - backlog, outlook, tariffs, dealer inventory, balance sheet and the RPMGlobal acquisition - MD&A: order backlog, dealer inventory, tariffs, IEEPA recoveries and the 2026 outlook. — Q2 2026 · publ. 5 August 2026 · source ↗
  4. ReportedAny replacement tariffs under other laws would come on top of the roughly $2.2 billion already expected.
    Caterpillar Form 10-Q for the quarter ended 30 June 2026 - backlog, outlook, tariffs, dealer inventory, balance sheet and the RPMGlobal acquisition - MD&A: order backlog, dealer inventory, tariffs, IEEPA recoveries and the 2026 outlook. — Q2 2026 · publ. 5 August 2026 · source ↗
  5. ReportedDuring the second quarter of 2026, customs authorities launched a system that enabled the submission of certain IEEPA refund claims, and Caterpillar recorded its expected recoveries.
    Caterpillar Form 10-Q for the quarter ended 30 June 2026 - backlog, outlook, tariffs, dealer inventory, balance sheet and the RPMGlobal acquisition - MD&A: order backlog, dealer inventory, tariffs, IEEPA recoveries and the 2026 outlook. — Q2 2026 · publ. 5 August 2026 · source ↗
  6. ReportedThe company says its outlook includes no further recoveries, so any additional refunds would be a gain and any new tariffs a cost.
    Caterpillar Form 10-Q for the quarter ended 30 June 2026 - backlog, outlook, tariffs, dealer inventory, balance sheet and the RPMGlobal acquisition - MD&A: order backlog, dealer inventory, tariffs, IEEPA recoveries and the 2026 outlook. — Q2 2026 · publ. 5 August 2026 · source ↗
  7. ReportedA third-quarter cost well above the $600 million guided would say new tariffs are replacing the ones the court removed.
    Caterpillar Form 10-Q for the quarter ended 30 June 2026 - backlog, outlook, tariffs, dealer inventory, balance sheet and the RPMGlobal acquisition - MD&A: order backlog, dealer inventory, tariffs, IEEPA recoveries and the 2026 outlook. — Q2 2026 · publ. 5 August 2026 · source ↗
Sources
Generated September 25, 2026