Construction Machinery Manufacturers NAICS 333120

Sep 7, 2025 - Tariffs hit Caterpillar, Deere

• Machinery manufacturers Caterpillar and Deere discussed the impact of tariffs and other economic headwinds during their recent earnings calls, according to Reuters. The two firms are struggling to absorb costs related to shifting US trade policy amid weaker demand and high interest rates. Caterpillar noted that margins would be pinched as tariffs push up costs for imported components and materials. Caterpillar has estimated tariffs could add $1.5 billion to its costs in 2025. Deere also warned of rising costs for steel and other inputs. Global economic uncertainty and high interest rates have also softened demand for some types of equipment as buyers tap the brakes on large capital outlays. Caterpillar said steadier demand for its engines, turbines, and locomotives used in the power generation and rail industries would help offset weaker market conditions in construction and mining.
• Construction spending for nonresidential buildings is expected to remain sluggish in 2025 and 2026, according to the American Institute of Architects’ (AIA) most recent Consensus Construction Forecast. Total spending for nonresidential building construction is expected to rise 1.7% in 2025 and 2% in 2026 after increasing 2% in 2024. For the next two years, growth will be led by data centers. Spending on institutional projects should remain steady as they are less susceptible to cyclical factors. AIA Chief Economist Kermit Baker said, “A multitude of factors are preventing substantive growth in nonresidential construction. Stubbornly high long-term interest rates, falling consumer confidence scores, rising tariff rates for many inputs to construction and construction labor shortages exacerbated by restrictive immigration policies are limiting prospects for positive sustained growth.”

• Construction firms that work on civil infrastructure projects are holding steady as they manage uncertainties, including waning backlog growth and weaker margins, according to FMI’s third-quarter Civil Infrastructure Construction Index (CICI) survey. The CICI reading for the third quarter was 50.8 compared to 52.2 in Q2 2025 – on a 100-point scale. Any CICI reading above 50 indicates that more civil infrastructure contractors see conditions as good than poor. While about 52% of firms surveyed said their work backlogs had risen in Q3 2025 compared to a year earlier, only 25% expected backlog growth in Q4. While civil infrastructure firms expect backlogs to ease, margins remain under pressure from competitive bidding and higher costs. FMI expects firms to focus on project selection and cost controls to improve margins, as higher work volumes are a less reliable profitability boost.
• John Deere and Volvo Construction Equipment (Volvo CE) recently announced large-scale expansions of their US-based manufacturing footprints, according to Engineering News-Record. Deere & Co. will invest $20 billion over 10 years into its U.S. operations, including new and expanded facilities in Missouri, North Carolina, Tennessee, and Iowa. Volvo CE is allocating part of a $261-million global investment to enhance its Shippensburg, Pennsylvania excavator and wheel loader manufacturing site with new assembly lines, automation, and employee training. Both companies said their expansion plans would improve logistics, bolster US manufacturing, reduce supply chain vulnerabilities, and improve responsiveness to regional markets.