Big-name industrial stocks are taking on heavy fire from Trump's escalating trade war with China

Heavy machinery player Caterpillar (CAT) - Get Report has seen its shares tank 11% over the past month. The reason for the profit-taking in Caterpillar isn't hard to comprehend. Investors are likely growing concerned on whether the company can hit its bullish guidance on China in light of the country's slowing economy and rising trade tensions with the United States.

Right now, the action in the stock suggests a tempering of expectations when second quarter earnings are delivered in July. 

Said Caterpillar in its most recent annual report:

"We expect 2018 sales in China to be higher due to continued building construction and infrastructure investment with a strong first half and some tempering in the latter part of the year, largely due to anticipated seasonality."

Caterpillar CEO Jim Umpleby reiterated that optimism on an earnings call in April: 

"China continues to be stronger than we expect. We now expect the China 10-ton and above excavator demand to be up 30% this year. At that level that's about 88,000 excavators for the industry, that's probably about 20% to 25% above where we think normal replacement demand and the macro environment in China supports. But we do at this point continue to expect China to be very strong for the rest of the year."

Investors are applying the same logic right now -- a potential warning on China outlooks from industrial companies -- to others like Caterpillar. 

If the selling continues this week, it could present a buying opportunity. 

"The sell-off in industrial stocks has been sharp, and the prospect of damaging trade wars is real, but the downdraft may have been overdone. It may be time to take another look at the sector," says C.J. Lawrence Portfolio Strategist and Investment Advisor Terry Gardner, Jr.

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