The steel and aluminum tariffs imposed in 2018 had a significant effect on Caterpillar, with Bonfield last year citing material costs up 2% due to higher steel prices, but the effects appear to be stabilizing now.
“It’s now been a year since tariffs were implemented, and input prices are moderating,” Bonfield said Wednesday on the call.
Soon after the tariffs took effect, the OEM began focusing on price realization, meaning it increased prices to maintain desirable margins, “Price realization more than covered higher manufacturing cost this quarter, an improvement versus Q1,” Bonfield said.
