Tractor maker Deere has warned that US President Donald Trump’s tariffs are backfiring on American farmers, leaving many producers short of cash and reluctant to replace ageing machinery. The world’s largest agricultural equipment manufacturer says demand for high-end farm equipment in its home market is weakening as growers struggle with low crop prices, rising costs and ongoing trade uncertainty.
Cory Reed, president of Deere’s agriculture and turf division, said the pressure is most acute in North America. “The large ag business has seen the most pressure, and that’s largely in the North American market,” he told the Financial Times, referring to Deere’s division that sells high-horsepower tractors, combines, sprayers and precision agriculture technology. “Most of that downturn was our home market, here in the US. It wasn’t the European market, and it wasn’t the South American market.”
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The slowdown has forced Deere to sharply cut production at its flagship tractor plant in Waterloo, Iowa. The company is now “building half as many tractors this year as we did two years ago”, Reed said. He added that further job cuts are expected in 2026, following several rounds of layoffs in recent years.
“Our US market has been the one under the most pressure … based on what’s happened with trade flows, what’s happened with tariffs and what’s happened with the escalating cost structure internally, as we’ve seen that market cycle down,” Reed said.
Much of the strain stems from disruptions to agricultural trade. China, traditionally the biggest buyer of US soybeans, only resumed purchases last month after retaliating against new tariffs on Chinese goods. The pause created a supply glut that has weighed on farmer sentiment and pushed prices sharply lower. US soybeans are down about 40 per cent from their mid-2022 highs, while corn prices have fallen nearly 50 per cent.
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In response, the Trump administration announced a $12bn aid package for farmers, including $11bn in one-off payments to crop growers. The White House said the support would offer “much-needed certainty”, but growers warned it would not make up for months of depressed prices and disrupted trade. Farm bankruptcies rose nearly 50 per cent in the first nine months of 2025.
Deere expects sales in its large agricultural machinery business to fall 15 to 20 per cent in its 2026 fiscal year. Net income dropped 29 per cent to $5bn in the year to November 2, and profits are forecast to weaken further to between $4bn and $4.75bn next year.
With crop prices under pressure, many farmers are avoiding six-figure machinery purchases and extending the life of existing equipment. “Customer uncertainty” has kept demand muted, Reed said. “If you’re a farmer and you’re trying to make a capital equipment decision, and you’re not sure what exactly your export market is, [you’re less likely to buy].”
Tariffs have also lifted Deere’s manufacturing costs. Duties on steel and aluminium have pushed up US steel prices, even for domestic buyers. The company expects a $1.2bn pre-tax hit from tariffs in 2026, double this year’s impact.
Reed said he expects the downturn to bottom out in early 2026, helped by lower interest rates, government support and improving trade flows. Ultimately, he said, restoring predictable market access will be key: “Getting the free flow of commodities back out of the US into the global market.”
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