John Deere machinery prices could rise by up to 4%

John Deere is rarely shy of publicity or allowing itself to be put under the spotlight, and in doing so it does serve as a bellwether for the agricultural machinery industry generally.

As with the industry as a whole, the company is suffering from a severe downturn in trade of around 30%.

That is nothing exceptional, but to add to its woes – and those of other international companies – the tariffs imposed by the US government may cost the company $500 million this fiscal year.

In a recent interview with The Wall Street Journal, Josh Jepson, Deere’s chief financial officer (CFO), attributed 60% of these costs to levies on imported goods from Europe, China and elsewhere.

Home-produced

However, Jepson also noted that around 80% of the machinery sold into the American market is produced in the US. and approximately 75% of its suppliers are also based there, although that does not automatically convert to 75% of the components being made in the US.

Cotton harvester — The remarks of Deere’s CFO, Josh Jepsen, referred to the US market, but the same inflationary forces are prevalent in Europe

Despite all the talk of tariffs affecting trade, there is a good deal of uncertainty surrounding their implementation. A US court blocking them in May, a decision that was immediately appealed by the government, and so they remain in limbo.

With the stalemate continuing, Deere has decided not to add the cost of tariffs to its equipment, for the time being.

Deere passes on inflation

Yet beyond the question of tariffs there is general inflation to be contended with, and so the company has started to move prices upwards for the 2026 model year by 2-4% in the US, and the same may well apply here in Europe.

With the lack of enthusiasm amongst farmers for capital expenditure, price increases will not encourage greater sales.

Deere is caught in a bind – just how much more they can squeeze from suppliers who will find themselves in the same boat of suffering the cost of inflation will be a determining factor in the company’s profitability.

It is a question that all manufacturers are facing and, with the publicly owned corporations having fickle shareholders to keep happy, that will remain the top priority.