Farm Machinery Manufacturers NAICS 333111

May 23, 2025 - Tariff Headwinds

• Deere & Co in a May earnings call said it incurred tariff-related expenses of $100 million in Q2, and expects those costs to approach $400 million for the rest of the year. The forecast is based on tariffs in effect as of May 13. The brunt of the $500 million tariff impact will be felt in Deere’s construction and forestry operations, which are more exposed to China than its agriculture business. While Deere’s sales fell 16% in Q2, they exceeded expectations due, in part, to stronger farm balance sheets as the USDA makes $10 billion in emergency farm payments following a poor 2024 crop year. Deere expects increased farm liquidity and more stable crop prices to help mitigate tariff effects for the remainder of 2025. With nearly-full 2025 order books, Deere’s ability to raise prices is limited, but the company said it’s evaluating price increases for 2026.
• Concerns over the high cost of new farm equipment are leading many growers to shift their replacement strategies, with some opting to extend the lifespan of their current machines, while others are investing in late-model, low-hour used equipment through auction or dealer channels, Farm Equipment reported in March. Leasing activity also began increasing in the second half of 2024 as producers began exploring methods to reduce equipment costs. With farm incomes projected to be lower this year and prices for new machinery high, strong demand for used equipment is expected to persist. “Producers may take a wait-and-see approach in the first half of 2025, potentially delaying equipment upgrades as the spring planting season approaches,” Lucas Scheibe, an AgDirect territory manager in North Dakota told FE, adding “However, if policy and tax conditions remain favorable, improved commodity prices could bolster farm income and influence buying decisions."

• US manufacturers have much to lose if a trade war erupts between the US and its largest trading partner Mexico, The New York Times reports. President Trump has vowed to slap 25% tariffs (or higher) on all goods from Mexico unless it stops the flow of migrants and drugs to the US. While Mexico depends heavily on trade with the US – exporting some 80% of its goods to America – it accounted for nearly 16% of overall US exports in 2022, according to the Office of the US Trade Representative. Tariffs on Mexico and China, another Trump target, would have widespread ramifications for manufacturers, making it more expensive to produce goods that use foreign components. And if other countries respond with retaliatory tariffs, it could also make it more expensive for manufacturers to export goods to foreign markets, according to Manufacturing Dive.
• Employment by farm machinery manufacturers shrank 4.6% in March compared to a year ago, while average industry wages at agricultural, construction, and mining machinery manufacturers were flat over the same period at $30.36 per hour, according to the latest US Bureau of Labor Statistics data. High prices for farm machinery and the tough farm economy have caused farmers to cut back on spending for new equipment leading manufacturers to trim their payrolls. Farm equipment manufacturers CNH Industrial and AGCO Corp. each reported double-digit year-over-year sales declines in their first quarters.