Used construction equipment inventory on Sandhills Global platforms fell 11.03% year-over-year in February 2026. Wheel loaders led the category, down 13.75% year-over-year. Backhoes dropped 24.6% year-over-year in January, the sharpest single-category move Sandhills tracked. The February report showed the first month-over-month uptick in eight months, a modest 1.37% rise, driven by used dozers.

Two forces are working together here. Rental companies are absorbing quality machines at the top end before they ever hit dealer lots. And contractors who planned to trade into new iron are holding what they have because new iron costs more than it did a year ago. Supply constrained, buyers motivated, asking prices trending sideways to up across most categories. If you have clean iron sitting on your lot right now, this report is telling you something about your asking price.

TODAY’S STORY

The Producer Price Indexes Are No Longer Someone Else's Problem

The numbers from the Associated General Contractors of America for January 2026 are not abstract. Aluminum mill shapes were up 33% year-over-year. Steel mill products were up 20.7%. Copper and brass mill shapes were up 15.7%. These are the raw inputs in every machine built in or imported into the United States. And according to AGC chief economist Ken Simonson, those increases are no longer staying in the commodity markets. The construction equipment and machinery price index rose 5.6% in the past 12 months, the steepest increase in two years.

John Deere quantified what that looks like for a major OEM. The company absorbed roughly $600 million in direct tariff expenses in fiscal year 2025. For fiscal 2026, they are forecasting that figure nearly doubles to approximately $1.2 billion. If the third-largest construction equipment manufacturer is burning $1.2 billion a year in tariff costs, that money goes somewhere. A portion gets absorbed. The rest lands on the sticker.

The Supreme Court Changed the Mechanism. It Did Not Change Your Bill.

On February 20, the Supreme Court struck down the administration's use of the International Emergency Economic Powers Act to impose broad tariffs, in a 6-3 decision. For about 24 hours, contractors and dealers thought they might be getting some relief. Then the White House invoked Section 122 of the Trade Act of 1974, imposing a 10% surcharge on most imports effective February 24, capped at 150 days unless Congress acts. Per Engineering News-Record's analysis, the Section 232 steel and aluminum tariffs at 50% stayed in place. Imported equipment and fabricated assemblies outside the Section 232 categories now carry the 10% Section 122 surcharge on top of already embedded steel and aluminum costs.

The mechanism changed. The exposure did not. New equipment prices are not coming down this year. They are going to stay elevated and likely keep climbing as OEMs work through cost pass-through cycles.

What Smart Operators Are Actually Doing

There are two legitimate plays depending on your position.

If you run a fleet, the case for keeping and maintaining existing machines just got measurably stronger. A 5.6% price increase on new equipment does not disappear into improved productivity in most applications. Before you authorize a replacement, look at what a quality rebuild or a disciplined PM investment does to your cost-per-hour on the iron you already own. The answer will probably change your decision.

If you are a used equipment dealer, you have pricing leverage that has not been this strong in two years. Inventory is down 11% year-over-year. New alternatives cost more than they did at the start of 2025. The buyers who would normally buy new are shopping your lot instead. Price your appraisals accordingly and stop leaving margin on the table.

QUICK HITS

Small Iron: Takeuchi launched the TL11-R3 compact track loader at CONEXPO, the sixth and largest model in its CTL line. It is the company's first machine to run electric-over-hydraulic controls. Kubota is widely expected to release the SVL110-3, its largest compact track loader yet. Dealer videos of the machine leaked last fall and with the SVL75-3 and SVL97-3 leading EDA's 2025 new financed sales data, Kubota set this one up to move. Bobcat has been pushing lithium-ion battery packs for its electric forklift line, announced in February ahead of the show.

Big Iron: Volvo Construction Equipment hit CONEXPO with 14 new machines, its largest single product launch period in company history. John Deere and Wirtgen Group combined for 24 new machine debuts at the show, including next-generation SmartGrade motor graders with improved cab ergonomics, G5 displays, and automated blade features. Caterpillar's new electric-drive medium dozer and the 319 excavator, which cuts rear overhang by 67%, were among the most-discussed machines on the floor.

Ag: John Deere announced model year 2027 updates to the X9 and S7 combine lines and debuted the JD5 and JD8 industrial engines at CONEXPO for other OEM applications. The company is forecasting construction and forestry net sales up roughly 10% in fiscal 2026 despite carrying an estimated $1.2 billion in direct tariff expense.

Mining: Caterpillar's redesigned 6015 mining shovel is delivering more than 5.5% in fuel savings versus its predecessor, along with improved undercarriage durability and standard bucket linkage autolubrication. The pitch to mine operators is more tons moved per year without a proportional increase in cost per ton, which is exactly the conversation happening at copper and iron ore operations right now.

DEALS & MOVEMENTS

WHO NEEDS TO KNOW

Rental Companies: Sunbelt just raised its capex target by $400 million mid-year and reported a fleet average age of 51 months, which means meaningful replacement cycles are coming -- know who is doing that buying and get in front of the volume now.

New Equipment Dealers: John Deere is projecting $1.2 billion in direct tariff costs for fiscal 2026, which is double last year; price increases are already embedded and more are likely coming, so help your customers lock in orders before the next round hits.

Used Equipment Dealers: Used wheel loader inventory is down 13.75% year-over-year and new alternatives cost more than they did 12 months ago, which means you have pricing leverage you have not seen in two years -- stop appraising to last year's comp.

Salespeople: CONEXPO just wrapped after 2,000 exhibitors and three million square feet of exhibit space; your customers have a wish list from the show, so call them this week and find out what they actually want delivered now versus what was a concept rendering on a screen.

Fleet Managers: Before you approve any new equipment purchase in the next 90 days, run a tariff-adjusted buy-versus-hold analysis -- the 5.6% machinery price increase alone can flip the math in favor of keeping what you have.

Parts Managers: Operators stretching their machines to avoid high new iron prices means more hours on existing components; stock depth on high-run consumables now before demand tightens your supply.

Finance and Leasing: Section 122 imposes a 10% surcharge on most imported equipment effective February 24; model this into residual value assumptions on any operating lease you are structuring on imported iron.

Auction Managers: The Alex Lyon late-model Cat rental fleet dispersal running through March 25 is the most relevant live benchmark for rental return pricing in the current market -- watch the results closely.

Fanatics: Vermeer showed a prototype lunar excavator at CONEXPO designed for Interlune to harvest helium-3 on the moon's surface -- no pricing announced, though we suspect freight is going to be the issue.

THE LUNCH ROOM

SIGN-OFF

That’s it. The tariff conversation is going to get louder before it gets quieter, especially if pending Section 232 investigations into robotics and industrial machinery conclude on the accelerated timeline some analysts are projecting for spring. If you are seeing price increases hit your local market faster or slower than the national numbers suggest, reply and tell me what you are dealing with. The regional picture often tells a different story.

— MachineryBrief

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