Equipment maker Caterpillar says tariffs may increase its Q2 costs by up to $350 million

Caterpillar said Wednesday it anticipates that tariffs may increase its second-quarter costs by up to $350 million as its first-quarter sales slipped on declining demand for its equipment.

A lot of uncertainty remains over President Donald Trump's trade war. On Tuesday Trump signed an order relaxing some U.S. tariffs on imports of autos and auto parts. But it remains unclear what impact Trump’s broader tariffs will have on the U.S. economy

In the first quarter, Caterpillar's revenue dropped to $14.25 billion from $15.8 billion a year earlier. The performance fell short of the $14.54 billion that analysts surveyed by Zacks Investment Research were expecting.

Sales volume dropped by $1.1 billion. Dealer inventories rose by $100 million in the quarter, significantly down from the $1.4 billion increase in the prior-year period.

Caterpillar earned $2 billion, or $4.20 per share, for the three months ended March 31. A year earlier the Irving, Texas-based company earned $2.86 billion, or $5.75 per share.

Removing restructuring costs, earnings were $4.25 per share. That missed then $4.30 per share that Wall Street was looking for.

Earlier this month Caterpillar Inc. announced that Chairman and CEO D. James Umpleby III will become its executive chairman on May 1. Chief Operating Officer Joseph Creed will succeed Umpleby as CEO and become a board member.

Umpleby served as CEO for eight years.

For the second quarter, Caterpillar said it foresees its sales being similar to the prior-year period. When accounting for the cost impact of current tariff levels for the rest of the year, the company anticipates full-year sales will be down slightly compared with a year earlier, which is in line with its previous expectations.

Shares rose more than 3% before the market open on Wednesday.