Caterpillar reported that its quarterly profits missed Wall Street estimates by a wide margin. Softening demand in China and higher manufacturing and freight costs sent shares in the world’s largest manufacturer of heavy equipment for construction and mining tumbling by 8 percent. The report also ignited fears of a global economic slowdown given the manufacturing firm's immense international operations.

Net income at the Deerfield, Ill.-based company grew to $2.55 per share in the three months through December, less than the $2.99 per share that analysts expected, it said on Jan. 28. Revenue rose to $14.3 billion, in-line with Wall Street expectations.

Caterpillar, a bellwether for global economic activity, benefited in the past year from what the International Monetary Fund called the strongest global growth surge since 2010.

Last year, Caterpillar said it would have to raise costs to mitigate the impact of President Trump’s double-digit tariffs on steel and aluminum imports. Cost of sales -- a key indicator of the effect of the new levies -- rose 11 percent in the quarter to nearly $10 billion, Fox Business reported.

Overall for 2018, revenues rose to $54.7 billion, while profits grew to $11.22 per share. Caterpillar expects net income to hit as high as $12.75 per share in 2019.

“Our outlook assumes a modest sales increase based on the fundamentals of our diverse end markets as well as the macroeconomic and geopolitical environment,” CEO Jim Umpleby said.

Alongside the tariffs on the commodities, Trump has also imposed duties on $250 billion in Chinese shipments to the U.S.

The White House is in the midst of negotiations with China over deal to address the trade deficit between the two countries, as well as Beijing’s theft of intellectual property and forced technology transfer for those companies that seek to do business there. A delegation of 20 Chinese officials is slated to visit Washington D.C. to continue discussions.

Meanwhile, a slow-down in the Chinese economy is spurring fears of a potential global recession. While Caterpillar's sales in Asia grew 8 percent in the quarter, it was the slowest growth across all the company's four regions. Construction sales in Asia fell 4 percent amid "lower demand in China."