Deere Faces $500 Million Tariff Challenge, Plans Production Shift

Quad Cities, IA – Farm equipment giant Deere & Company is bracing for a $500 million impact from new tariffs expected to be imposed in 2025. This change predominantly affects its construction and forestry divisions.

In response to these anticipated costs, Deere is exploring a global reshuffle of production across its existing factories. The company is also evaluating potential price increases to help offset the tariffs.

To further mitigate the impact of these tariffs, Deere is adjusting its supply chains to lessen reliance on imports that are heavily taxed. Additionally, the company is underway in certifying more goods under the U.S.-Mexico-Canada Agreement (USMCA) to qualify for trade exemptions.

Despite the tariff challenges, Deere is planning to invest $20 billion in U.S. manufacturing over the next decade, aiming to decrease its exposure to foreign tariffs. Most of the company’s order books for 2025 are already full, but Deere is assessing price increases for its 2026 equipment to respond to rising costs.

Deere is also focused on cutting production costs and modifying inventory levels to align with current demand. The company and other farm equipment makers are facing weak demand as farmers contend with lower crop prices and climbing expenses.

Deere’s Chief Financial Officer mentioned that the additional costs come at a particularly difficult time, posing challenges for both Deere and its customers. Although there is hesitation to increase prices due to low demand and the impacts of previous price hikes caused by inflation, some price increases are expected, partly due to tariff impacts.

The company has already implemented a price increase of 2% to 4% for 2026 models of sprayers and planters but has not yet added any further costs. Importantly, Deere retains the flexibility to adjust prices before orders are finalized.

As new products are set to launch later this summer and fall, Deere will continue to review its pricing strategy. On Wall Street, Deere’s stock (DE) currently holds a Moderate Buy consensus rating based on eight Buys and seven Holds recorded in the past three months. The stock is priced at $537.08, suggesting a potential upside of 6.68%.