Deere Warns Tariffs Could Disrupt Farm Recovery
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World farm machinery leader Deere & Co. said the agriculture economy is finally showing signs of turning around, although looming tariffs could upend the nascent recovery.
The Illinois-based company said it’s starting to see fundamentals improve, with inventories of used machines easing after production cuts of new equipment, while rallying corn prices are bolstering expectations farmers might start spending. Overall, American farm income is estimated to rise for the first time in three years in 2025, according to the U.S. Department of Agriculture.
“Deere’s performance in the first quarter highlights our continued focus on optimizing inventory,” CEO John May said in a statement Feb. 13. “We’re seeing compelling evidence that our efforts are positioning the company to successfully navigate the current environment.”
The company’s shares were 1.7% lower at 12:25 p.m. in New York, paring an earlier drop of as much as 5.3%, the most intraday in a year.
The months ahead remain challenging. The maker of the iconic green and yellow machines used to plant and harvest crops kept its 2025 net income estimate between $5 billion to $5.5 billion, while sales in the key North American market are still seen down 30% for the year, according to the statement.
(Bloomberg)
That outlook doesn’t include the potential impact of tariffs from President Donald Trump. Duties on U.S. imports of steel and aluminum will raise production costs while any retaliatory tariffs from America’s trading partners could hit demand for agricultural goods and limit purchasing power from farmers.
Deere said on an investor call that China’s new tariffs on imports of American agriculture machinery will be immaterial, while the company is running scenarios on the impact of any other tariffs.
Meanwhile, the pile of used equipment remains formidable. Farm-machinery platform Tractor Zoom pointed to a 40% increase in Deere’s large row-crop tractors from a year ago, while sales of those fell 61% in its fiscal first quarter.
“It will take time for the broader dealership network — and John Deere Corporate — to adjust to the realities of a slower ag economy,” said Andy Campbell, director of insights at Tractor Zoom, which provides real-time farm equipment data.
On the brighter side, Deere’s first-quarter net income of $869 million — while down 50% from a year earlier — was above an estimate for $848.7 million.
Deere, in highlighting improvements, pointed to increased sales of its kits to connect tractors to the internet using Starlink — especially in parts of Brazil, where connections are lacking. Deere has also been introducing high-tech equipment, such as plows, sprayers and mowers that can operate without a driver.
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