FILE PHOTO: The Caterpillar logo is seen in this illustration taken August 3, 2025. REUTERS/Dado Ruvic/Illustration/File Photo

(Reuters) -Caterpillar on Thursday raised its estimate of tariff-related costs for 2025, citing additional levies and clarifications, sending its shares down 3% in extended trading.

Sweeping tariffs have raised costs across Caterpillar's supply chain, as the company imports key components such as sensors, even as manufacturers race to localize production.

The Trump administration's latest tariffs, announced on July 31, target imports from dozens of countries, including major trading partners such as Canada, the European Union, Japan, India and several Southeast Asian nations.

"While the company continues to take initial mitigating actions to reduce this impact, trade and tariff negotiations continue to be fluid," Caterpillar said in a regulatory filing on Thursday.

Caterpillar now expects a tariff hit of $1.5 billion to $1.8 billion this year, up from its prior forecast of up to $1.5 billion.

The company had issued its previous expectations along with its second-quarter earnings results earlier this month.

On Thursday, it said the higher costs will push its adjusted operating profit margin toward the bottom of its target range, though it left its full-year sales and revenue outlook unchanged.

Industrial machinery makers are grappling with higher costs from Trump's expansive tariffs on imports, while weak demand and elevated interest rates limit their ability to pass on the burden to customers.

The heavy equipment maker also raised its estimate for third-quarter tariff costs to as much as $600 million, from a prior forecast of up to $500 million.

(Reporting by Shivansh Tiwary in Bengaluru; Editing by Maju Samuel and Alan Barona)