Heavy equipment manufacturer Caterpillar expects U.S. import tariffs to result in a cost headwind of $250 million to $350 million in the second quarter. The company anticipates a slight decline in sales compared to the previous year, mainly due to tariffs on imports from China.

While growth in Caterpillar’s energy and transportation division is expected, lower machine sales in the resource and construction industries may offset gains, keeping overall second-quarter sales flat year-over-year. The company’s order backlog increased by $7.1 billion in the first quarter compared to the prior year and by $5 billion sequentially, driven by high order rates.

In its construction industries division, sales dropped 19% to $5.25 billion due to lower volumes and prices, while its energy and transportation division saw a 2% decline to $6.6 billion following reduced sales volume and higher manufacturing costs. Sales fell across North America, Latin America, Africa and the Middle East, and Asia-Pacific, primarily due to lower volumes and pricing adjustments influenced by dealer inventory changes.

Caterpillar posted a first-quarter profit of $2.6 billion, marking a 27% decrease from the prior-year period.