John Deere is the kind of homegrown, domestic manufacturer President Donald Trump claims to support, yet his tariffs and hostility toward China are threatening its bottom line.
The Moline, Ill.–based tractor and agriculture machinery manufacturer boasted a record profit just two years ago, but since then its luck has turned. That’s partly because of instability related to tariffs and an economic fight with China. Last month, the company said it would lay off 238 production employees in Illinois and Iowa, citing “decreased demand and lower order volumes.”
In Q3, the company’s net profit fell by a quarter compared with the same time last year, and its worldwide net sales and revenues fell by 9% to $3.9 billion, down from $5.8 billion last year. The company also lowered its guidance for its annual net profit through the end of the year.
On the company’s most recent earnings call, investor relations director Josh Beale said there were “pockets of optimism” across John Deere’s business, but added customers may be feeling the sting of tariffs and instability.
“Given challenging industry fundamentals and evolving global trade environment and ever-changing interest rate expectations, our customers are operating in increasingly dynamic markets, which naturally drives caution as they consider capital purchases,” Beale said.
Agriculture is an industry in constant flux. Elevated crop prices mean farmers can consider buying new tractors and equipment, but in challenging times they may buy used equipment or hold off on a big purchase. New tractors can cost tens of thousands of dollars depending on their capabilities, and many farmers rely on credit for these purchases. Prices are low for the two main American crops: corn and soybeans. Corn is selling for 50% less than its price in 2022, while prices for soybeans are down 40%, the New York Times reported.
John Deere’s customers, apart from the confusion of tariffs, are also facing headwinds from an economic battle with China. In response to Trump’s tariff escalations, the world’s second-biggest economy retaliated with tariffs on U.S. soybeans; last year, China imported $13 billion worth—or about equal to the market cap of John Deere competitor Kubota. Soybean imports to China are down by 51% this year, and the country hasn’t made any advanced soybean purchases for the upcoming harvest, the NYT reported.
If John Deere customers make fewer equipment purchases, the cutback will hit the company’s domestic manufacturing, which makes up 80% of its U.S. sales and a quarter of its international sales.
John Deere did not immediately respond to Fortune’s request for comment.
Still, there may be a silver lining to Trump’s policies for John Deere. The company could benefit from bonus depreciation changes in the One Big Beautiful Bill, passed in July, which gives farmers a tax break on equipment purchases.
Because of its robust domestic manufacturing, the company may also be more immune to tariffs on foreign imports than competitors Kubota, Fendt, and Mahindra, which manufacture more of their products internationally.
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