Trade war threatens to slow down resurgence

New York: For Caterpillar Inc, a bellwether of American industrial might, Donald Trump’s trade war is threatening to halt what was shaping up as a record year for profits.

Analysts have been predicting net income could reach an all-time high of $6.24 billion (Dh22.9 billion) as expanding economies fuel robust demand for the manufacturer’s signature yellow diggers, bulldozers and dump trucks. But the shares had their worst first half since the recession of 2009, and they’ve been slow to rebound.

That’s because Caterpillar gets more than half its sales outside the US, and an escalating trade war is menacing global economic-growth prospects. Tensions have been high as Trump warned he could expand import tariffs that have already led to retaliatory duties by China, Mexico, Canada and Europe. Rising metal prices that have dented industrial profits could ensnare Caterpillar’s recovery.

That’s the biggest risk, said Larry De Maria, an analyst at William Blair & Co. The trade war absolutely could have an impact and spill over into the global economy, and could have an impact on the strong cycle Caterpillar has seen in their end-markets generally.

Revenue at Deerfield, Illinois-based Caterpillar is forecast to rise to $14 billion in the second quarter from $11.3 billion the same period a year earlier, based on the average of 13 analysts’ estimates compiled by

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