(Reuters) -Caterpillar ( CAT ) reported a lower second-quarter profit on Tuesday due to sluggish construction equipment demand and warned of up to $1.5 billion hit from costs related to U.S. tariffs in 2025.

Shares of the company, often viewed as bellwether for the industrial economy, fell about 4% in premarket trading after it also flagged a tariff impact of $400 million to $500 million in the third quarter.

Sweeping tariffs on U.S. imports have impacted companies across sectors, prompting many to rejig their supply chains and localize production.

Additionally, high interest rates and inflationary headwinds have pushed dealers to scale back on equipment orders and realign inventory to match demand.

Adjusted profit in the second quarter fell to $4.72 per share, compared with $5.99 a year ago. Its sales and revenue for the quarter fell 1% to $16.7 billion from a year ago.

The company now expects its annual sales and revenue to be slightly higher than last year and compared to its prior expectations of about flat.

(Reporting by Nathan Gomes in Bengaluru; Editing by Arun Koyyur)