Stock value for shares of John Deere have jumped almost 23% since the 2016 Presidential election. Something that could affect the company’s future earnings hinges on whether Congress attempts to implement a Border Adjustment Tax to help offset lost tax revenue from moving the corporate tax rate from 35% down to 20%.
CEO Samuel Allen says Deere & Co. would actually benefit from such a tax, being a “significant net exporter.” Still, he doesn’t support it, as he explained to CNBC’s Squawk Alley.
“We’re very concerned for our farmer customers,” he says. “If, as a result of the adjustment tax, it had an unintended consequence of causing countries like China and Mexico to buy their ag commodities from other countries. That would be negative for U.S. farmers who do a lot of exporting to China, Canada and Mexico.”
Allen also says any form of protectionism or nationalism is, on the whole, not beneficial for multinational companies such as Deere.
“We will adjust,” he says. “We will have to adjust, but it takes time for a manufacturer to adjust. It’s much more efficient if we can have open free trade – understandably fair trade, but free trade.”