Caterpillar (CAT) shares extended gains on June 3 after the White House slashed Section 232 tariffs on bulldozers, forklifts, and agricultural equipment from 25% to 15%.
According to the presidential proclamation that President Donald Trump signed earlier this week, the tariff reduction will take effect on June 8 and will remain in force through the end of 2027.
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Caterpillar stock has been a rewarding investment this year currently up more than 50% versus the start of 2026.
www.barchart.comWhat the Proclamation Means for Caterpillar Stock
CAT shares rallied because the company’s core products – bulldozers, forklifts, heavy construction machinery – are explicitly named in the proclamation.
The administration also lowered tariffs to 10% on foreign-made products that contain at least 85% of U.S.-produced steel, aluminum, or copper; a threshold Caterpillar is well-positioned to meet.
Together, these cuts relieve a key cost pressure. Many farmers and construction operators had been postponing major equipment purchases amid elevated input costs and trade uncertainty.
For Caterpillar, this meant a demand drought that directly suppressed its order flow.
Lower tariffs reduce equipment price inflation for end customers, which experts believe will boost deferred buying and bolster CAT’s already strong (despite suppressed order flow) backlog.
CAT Shares Stand to Benefit From AI Buildouts
The tariff tailwind arrives on top of an already compelling fundamental story. In the latest reported quarter, Caterpillar came in handily above Street estimates, with significant contributions from all three major business segments.
Meanwhile, the engineering equipment giant’s enterprise backlog also came in up an exciting 79% on a year-over-year basis to a record $63 billion in its fiscal Q1.
A key structural growth engine is Caterpillar’s “Power & Energy” segment where robust backlog growth is being driven by rising power demand tied to data center buildouts for cloud computing and generative AI.
Note that Caterpillar shares also currently pay a dividend yield of 0.65%, which makes them some-what more attractive to own in 2026.
How Wall Street Recommends Playing Caterpillar
Despite Caterpillar’s exceptional year-to-date gains, Wall Street continues to see further upside as the year unfolds.
The consensus rating on CAT stock sits at “Moderate Buy” with price objectives going as high as $1,165, indicating potential for another 20% rally from here.
www.barchart.com On the date of publication, Wajeeh Khan did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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