Why Caterpillar Stock Slumped Today
Shares in Caterpillar (NYSE: CAT) were down by 3.2% as of 11:30 a.m. ET today. There's little doubt over the reason for the decline: the coming into effect of 25% tariffs on products imported from Mexico and Canada, alongside raising tariffs on products from China to 20%.The sell-off is understandable given the company's negative exposure to an escalation in trade tensions. Caterpillar is a truly international company in its sales and operations. It has more employees outside the US (61,400) than it does in the US (51,500) , and it has plenty of competitors in local and regional markets across all of its businesses.As such, an escalation of trade conflict could lead to its products becoming uncompetitive due to retaliatory tariff action. In addition, Caterpillar has numerous manufacturing plants worldwide, including plants in China and Mexico. An increase in tariffs is likely to increase the costs of components manufactured at these plants, and that will eat into profit margin.Continue reading
Shares in Caterpillar (NYSE: CAT) were down by 3.2% as of 11:30 a.m. ET today. There's little doubt over the reason for the decline: the coming into effect of 25% tariffs on products imported from Mexico and Canada, alongside raising tariffs on products from China to 20%.
The sell-off is understandable given the company's negative exposure to an escalation in trade tensions. Caterpillar is a truly international company in its sales and operations. It has more employees outside the US (61,400) than it does in the US (51,500) , and it has plenty of competitors in local and regional markets across all of its businesses.
As such, an escalation of trade conflict could lead to its products becoming uncompetitive due to retaliatory tariff action. In addition, Caterpillar has numerous manufacturing plants worldwide, including plants in China and Mexico. An increase in tariffs is likely to increase the costs of components manufactured at these plants, and that will eat into profit margin.
