US tariff policies hit farmers and John Deere’s profits

American agricultural machinery manufacturer John Deere, often cited by President Donald Trump as an example of supporting domestic manufacturing, is facing pressure due to U.S. tariff policies. The ongoing trade conflict with China has already reduced American farmers’ incomes, which in turn has lowered demand for John Deere equipment.

The Moline, Illinois–based company reported record profits just two years ago, but the situation has since deteriorated. Last month, John Deere announced the layoff of 238 production employees in Illinois and Iowa, citing decreased demand and lower order volumes amid market instability.

In the third quarter, the company’s net profit fell by 25% year-on-year, while global net sales and revenue dropped 9% to $3.9 billion from $5.8 billion the previous year. John Deere also lowered its full-year net profit guidance, acknowledging the challenging market conditions.

On its most recent earnings call, Investor Relations Director Josh Beale noted that while there are pockets of optimism across the business, customers are feeling the effects of tariffs and trade uncertainty. Farmers are exercising caution, delaying capital investments such as the purchase of new machinery.

The situation is compounded by falling prices for key U.S. crops: corn prices are down roughly 50% compared with 2022, and soybean prices have dropped 40%. Meanwhile, China has imposed retaliatory tariffs on U.S. soybeans, reducing imports by 51% this year and making no advanced purchases for the upcoming harvest.

Reduced equipment purchases directly impact John Deere, as about 80% of its U.S. sales and a quarter of international sales are domestic products. However, the company sees potential benefits: bonus depreciation tax breaks passed over the summer could encourage equipment purchases, and its strong domestic manufacturing base makes John Deere less vulnerable to import tariffs than international competitors.

Tags: USA, duties, John Deere