Caterpillar Inc on Wednesday said it expects tariffs could push its second-quarter costs up by as much as $350 million, as the company reported a drop in first-quarter sales amid weakening demand for its machinery.

Despite recent developments in the US trade policy — including President Donald Trump’s order on Tuesday easing tariffs on imported cars and parts — uncertainty remains over the broader impact of the ongoing trade war on the American economy, reports AP.

The construction and mining equipment maker reported revenue of $14.25 billion for the first quarter, down from $15.8 billion a year ago. The figure also fell short of the $14.54 billion forecast by analysts surveyed by Zacks Investment Research.

Sales volume fell by $1.1 billion, while dealer inventories increased by $100 million — a notable decrease compared to the $1.4 billion inventory build in the same period last year.

Samsung sees revenue boost from smartphone sales despite chip slump

Net income dropped to $2 billion, or $4.20 per share, compared with $2.86 billion, or $5.75 per share, a year earlier. Excluding restructuring costs, adjusted earnings were $4.25 per share, slightly below Wall Street’s expectation of $4.30 per share.

Earlier in April, Caterpillar announced that CEO D. James Umpleby III will transition to executive chairman on 1 May, with Chief Operating Officer Joseph Creed set to take over as CEO and join the board. Umpleby has held the top role for eight years.

Caterpillar expects second-quarter sales to remain similar year-over-year and forecasts a slight decline in full-year sales, consistent with previous guidance.

Shares rose over 3% in premarket trading.