John Deere Tariff Impact: $600M Loss, Farmer Struggles, Layoffs & Sales Decline
Key Takeaways
- John Deere's facing $600 million in tariff costs this year alone, nearly double there initial projections
- Massive layoffs have hit Midwestern factories with over 2,000 jobs lost since April 2024
- Tractor prices jumped 60%+ over eight years putting new equipment out of reach for many farmers
- North American ag sales expected to drop 30% this year as farmers postpone equipment purchases
- Company remains cautiously optimistic about long-term prospects despite current challenges
The $600 Million Tariff Hammer
Let me be blunt about what were seeing here - these tariffs have created a financial nightmare for John Deere. The company's now projecting nearly $600 million in pretax tariff costs for fiscal 2025, up from an initial estimate of $500 million . That's real money, even for a giant like Deere.
In just the third quarter alone, tariff costs hit approximately $200 million, bringing the year-to-date total to around $300 million . The primary drivers for this increase? Higher tariff rates on Europe, India, and most significantly, steel and aluminum imports . When the Trump administration raised tariffs on steel and aluminum to 50% on June 4th, it hit manufacturing companies like John Deere especially hard .
What does this mean in practical terms? That $600 million could have funded:
- Research into new precision agriculture technologies
- Expansion of U.S. manufacturing facilities
- Price reductions to help struggling farmers
Instead, it's just vanished into the cost of doing business in the current trade environment. The company's been forced to raise prices on some 2026 models by 2-4% to offset these costs , which just makes the problem worse for farmers already struggling with tight budgets.
When Farmers Sneeze, John Deere Catches Cold
I've been following agricultural economics for over 10 years, and I've never seen such a perfect storm hitting farmers simultaneously. Crop prices for wheat, corn and soybeans have languished near multi-year lows in North America , while overseas demand for American crops has dwindled due to trade tensions .
Here's how this connects to John Deere's sales: when farmers don't get good prices for their crops, they postpone major equipment purchases. We're seeing this play out dramatically right now. Deere's worldwide net sales fell 18% through the first three quarters of 2025 , with the company reporting a 26% year-over-year drop in net income in Q3 .
The situation in North America - Deere's largest market - is particularly grim. The company expects sales for its production and precision agriculture segment to be down 30% for the entire fiscal year . That's not just a dip - that's a collapse in demand.
I've spoken with farmers at regional equipment auctions who've told me they're stretching their existing equipment another year or two rather than taking on new debt. One farmer from Iowa told me: "My Deere 8320R has over 4,000 hours on it, but with corn prices where they are, I can't justify spending $300,000+ on a new model, even with the improved efficiency."
The Human Cost: Layoffs Across Heartland Factories
This isn't just about corporate earnings reports - real people are losing there jobs over this. In August 2025 alone, John Deere announced 238 layoffs across factories in Illinois and Iowa :
- 115 positions at Harvester Works in East Moline, Illinois (last day: August 29)
- 52 positions at Seeding and Cylinder in Moline, Illinois (last day: September 26)
- 71 positions at Foundry in Waterloo, Iowa (last day: September 19)
These recent cuts add to over 2,000 employees laid off since April 2024 . Each one of those numbers represents a family impacted, a mortgage potentially at risk, and another blow to manufacturing communities in the Heartland.
The company's statement on the layoffs was straightforward: "Decreased demand and lower order volumes" . When farmers stop buying equipment, assembly lines slow down, and workers eventually get pink slips. It's that simple, and that brutal.
What doesn't get mentioned enough is how these layoffs ripple through small manufacturing towns. John Deere isn't just a employer in places like Waterloo, Iowa - it's often the primary employer. Local businesses from diners to daycare centers feel the impact when these good-paying manufacturing jobs disappear.
Why Farmers Are Holding Onto Their Wallets
The psychology right now in farm country is what I'd call "cautious to the point of paralysis." Tariff uncertainty and deflated commodity prices have made farmers increasingly hesitant to accept higher machinery prices .
There's several factors driving this hesitation:
Crop price uncertainty: With prices for key crops like soybeans lagging amid trade wars , farmers can't project their income with any confidence.
Equipment cost inflation: List prices for new tractors rose at least 60% over the last eight years, with some models more than doubling in price . A new high-end tractor can now cost $250,000+ more than it did just eight years ago.
Alternative options: Farmers are shifting to the used market or renting equipment instead of buying . Josh Enlow of Enlow Tractor Auction in Tulsa told the New York Times: "The increases in new pricing has definitely driven people back to the used market" .
Trade deal uncertainty: Cory Reed, president of John Deere's worldwide agriculture and turf division, noted that farmers are "waiting to see the outcomes of what these trade deals look like" before committing to major purchases .
This combination of factors has created what CFRA Research analyst Jonathan Sakraida perfectly described as making farmers "increasingly cautious in spending decisions and more hesitant to accept higher machinery prices" .
Beyond Tariffs: Other Factors Squeezing Deere
While tariffs are getting most of the attention, they're not the only challenge facing John Deere and it's customers. The agricultural sector has been dealing with multiple headwinds:
- Climate change impacts: Unpredictable weather patterns and extreme conditions have disrupted farming operations .
- Labor shortages: Finding enough workers remains an ongoing challenge throughout the agricultural supply chain .
- Rising operational costs: Beyond equipment, everything from fertilizer to fuel has become more expensive.
- Supply chain issues: Manufacturing disruptions continue to affect production schedules and costs.
John Deere has been trying to manage through this challenging environment by proactively matching production to retail demand. As CEO John May stated: "By proactively managing inventory, we've matched production to retail demand, enabling our company and dealers to respond swiftly to market shifts and customer needs" .
The company's also been investing in technology that helps farmers work more efficiently, particularly precision agriculture systems that enable more autonomous operations . These technologies offer long-term benefits but come with higher upfront costs that are harder to justify when farmers are cash-strapped.
Table: John Deere's Financial Performance Challenges (2024-2025)
Silver Linings and Future Prospects
Despite all the gloomy news, there's some reasons for cautious optimism - both for John Deere and American agriculture more broadly. The company's leadership continues to express confidence in the long-term outlook .
For one, Deere's seeing growing demand in both Europe and South America, which helps offset some of the weakness in North America . This geographic diversification is crucial for weathering regional downturns.
There's also potential positive developments on the policy front. Cory Reed noted: "We think there's positive tail winds from both what we see in the trade deals, and we think there are positive tail winds from what we see in tax policy" .
Favorable U.S. biofuel legislation and trade deals with countries like Japan could give farmers a boost soon . Many growers in Deere's top market of North America typically wait until the final months of the year to make purchasing decisions on new equipment , so there's still time for a rebound if market conditions improve.
Wall Street analysts generally remain optimistic about Deere's future too. Oppenheimer analyst Kristen Owen maintains a bullish outlook, expecting increased confidence heading into 2026 . Similarly, D.A. Davidson analyst Michael Shlisky told CNBC: "I can't imagine the company going much lower from here" .
What's Next for John Deere and American Farmers
Looking toward 2026, the big question is whether this represents the bottom for the agricultural equipment cycle. Some analysts, including Truist's Jamie Cook, believe 2025 could mark the low point for John Deere's earnings per share .
The company's made a bold commitment to invest $20 billion into U.S. manufacturing over the next 10 years , which signals confidence in its long-term future despite current challenges. This investment is framed as a effort to stay "cost-competitive in a global market" .
For American farmers, the path forward depends heavily on resolving trade uncertainties and achieving better commodity prices. As Josh Beal, John Deere's director of investor relations, noted: "Recent ag policy legislation has been positive and potential developments in trade agreements and demand for renewable fuels could also be supportive. However, until there's more stability in the industry, we'd expect customers to continue to take a measured approach to capital investment" .
The reality is that agriculture is a cyclical business, and we're currently in a down cycle. The unique combination of tariff impacts, commodity price weakness, and global trade uncertainties has made this downturn particularly severe, but history suggests recovery will eventualy come.
In the meantime, companies like John Deere and the farmers they serve are having to make tough choices to weather the storm. How long it lasts depends on factors beyond there control - trade policies, commodity markets, and global demand chief among them.
Frequently Asked Questions
Q1: Exactly how much have tariffs cost John Deere?
A: Tariffs have cost John Deere approximately $300 million year-to-date, with the company projecting a full-year impact of nearly $600 million for fiscal 2025 . This is up from there previous estimate of $500 million .
Q2: How many workers has John Deere laid off?
A: The company has laid off over 2,000 employees since April 2024 , with recent layoffs affecting 238 workers across factories in Illinois and Iowa .
Q3: Are John Deere tractors really getting more expensive?
A: Yes, list prices for new tractors have risen at least 60% over the past eight years, with some models more than doubling in price . A new high-end tractor can now cost $250,000+ more than it did eight years ago.
Q4: Is John Deere moving it's manufacturing overseas?
A: Despite there challenges, John Deere has committed to investing $20 billion in U.S. manufacturing over the next 10 years . Before the 2024 election, President Trump had threatened Deere with 200% tariffs if it moved production to Mexico .
Q5: What's the outlook for John Deere and American farmers?
A: Most analysts believe 2025 represents a bottoming point, with potential for improvement in 2026 if trade conditions stabilize and commodity prices recover . The company remains optimistic about long-term prospects despite near-term challenges .