MACHINERY BRIEF: THE STORY

THIS WEEK'S STORY

The Receipts Just Came In

Equipment World published a comprehensive accounting of what U.S. tariffs actually cost the major OEMs across 2025. The numbers, drawn from earnings reports and investor disclosures, are not guesses. They are audited financial figures. Here is what the largest players absorbed:

Caterpillar: approximately $2.6 billion in incremental tariff costs for the year, with $1 billion in rising manufacturing costs in the fourth quarter alone. The construction equipment segment reported $420 million in higher manufacturing costs in Q4 specifically. John Deere: approximately $600 million in fiscal 2025, with the company now forecasting that figure to nearly double to $1.2 billion in fiscal 2026. Komatsu: $580 million estimated for the full year, disclosed in its third-quarter earnings report on January 30, 2026. Kubota: a roughly $420 million hit to operating profit in 2025, with the company projecting $190 million for its 2026 fiscal year. Volvo CE and its parent Volvo Group: $54 million in Q3 2025, $75 to $100 million in Q4, and another $100 million expected in Q1 2026 alone.

Add it up across just these five companies and you are looking at over $4 billion in direct tariff costs in 2025. That number does not include dozens of smaller OEMs, component suppliers, or the second-order costs running through dealer parts and service supply chains. The total industry exposure is substantially higher.

Why the Bill Is Getting Bigger, Not Smaller

The February 20 Supreme Court decision striking down the IEEPA tariff authority was not a reprieve. Within hours, the White House invoked Section 122 of the Trade Act of 1974 and imposed a 10% surcharge on most imports, later bumped to 15%. Section 232 steel and aluminum tariffs at 50% stayed in place. The mechanism changed. The cost did not. For OEMs with significant non-U.S. manufacturing, the exposure continues. John Deere is projecting $1.2 billion for fiscal 2026. That is more than double what they paid in 2025. Komatsu is running manufacturing changes across its supply chain to reduce exposure. Volvo CE is accelerating its Shippensburg, Pennsylvania, production expansion, adding midsize and large crawler excavators plus four new wheel loader models in the first half of 2026.

The manufacturers that are actually solving this problem are the ones moving iron to U.S. soil. JCB's $500 million San Antonio facility, which will produce Loadall telehandlers and aerial access equipment, is on track to begin production in October 2026 with a target of 150 machines per day at full first-phase capacity. Volvo CE's Shippensburg expansion is ramping now. John Deere reiterated its $70 million Kernersville, North Carolina, excavator plant expansion in January, which the company says will produce the only excavator designed, developed, and manufactured entirely in the U.S. These are real moves. They take years to shift the economics, but the direction is clear.

What the Bill Actually Means for Your Purchase Order

Money absorbed by a publicly traded manufacturer does not disappear. It shows up in one of three places: margin compression, which shows up in earnings misses; price increases, which show up on your quote sheet; or supply chain changes, which show up as lead time variability and parts availability gaps. Caterpillar's construction segment posted an operating profit loss in Q4 2025 because of $420 million in manufacturing cost increases in a single quarter. That kind of hit does not get absorbed indefinitely. It finds its way into pricing cycles. Dealers are already seeing it in list price adjustments and in the premium between used and new iron, which has widened to levels not seen in a decade according to field reports from dealers comparing 2024 to current quotes.

The practical implication for anyone buying new equipment in 2026 is this: the cost structure underlying new machine prices is not normalizing. The OEMs carrying the largest tariff exposure are the ones facing the most pressure to pass costs forward. If you have orders to place and you have flexibility on timing, locking in prices now before the next tariff-driven cost cycle hits is not paranoia. It is math.

THE LUNCH ROOM

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If you are on the buy side and you are tracking a specific category where the tariff exposure of the OEM is making the price-versus-used calculation shift, reply and tell me what you're seeing. This is not the same story in every segment and the ground-level data matters.

— MachineryBrief

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