In times of uncertainty, it’s wise to slow down, take a deep breath and evaluate all options. That’s exactly how the farm equipment industry is reacting to President Donald Trump’s ongoing tariff saga.
On Wednesday afternoon, in fact, it came out that President Trump has decided to pause new tariffs on all countries except for China, who got hit with another increase.
That means a return to the baseline 10% tariff that is already baked into the final cost of imported equipment. But, again, that could all change in a minute with President Trump.
CNH Industrial, the global holder of Case IH and New Holland, was the first domino to fall. The manufacturer broke the ice last week, halting all shipments of farm equipment from its North America plants as well as all of its European Union (EU) imports into the U.S., calling it a “temporary move” to buy time to assess the situation.
UPDATE: As of April 10, CNH has reinstated shipments of all “presold” customer units. The company also says “impacts to shipments of inventory orders or future orders will be announced at a later time.”
Then on Tuesday evening, AGCO, which is headquartered in Duluth, Ga., but holds two mostly EU-based machinery brands in Fendt and Massey Ferguson, made a similar announcement. It will pause imports of finished equipment from its overseas production facilities into the U.S. but continue shipping equipment from its U.S. facilities into “non-tariffed countries” while the situation develops.
UPDATE: As of April 10, AGCO will resume shipping “certain products” into the U.S. from “most global locations” in light of President Trump’s 90-day tariff pause.
Meanwhile, John Deere, the equipment manufacturer with the largest market share in North America, has yet to publicly reveal its plan in light of the tariffs. John Deere is admittedly different from its rivals, though, considering 84% of its manufacturing network is based in North America. But the company does ship equipment all over the world, so it will likely face reciprocal tariff increases in many markets.
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As of late, there seems to be a bit of light at the end of the trade war tunnel. U.S. Agriculture Secretary Brooke Rollins told reporters on Tuesday she thinks there could be some new more-favorable-to-the-U.S. trade deals in place by the end of this week.
A (Mostly) EU-Based Perspective
And then there is Claas, which manufacturers its Lexion combine in Omaha, Neb., but hosts about 80% of its presence across manufacturing sites in the EU.
Eric Raby, Claas’ senior vice president – Americas, says the company’s plan is to continue shipping and delivering machines to U.S. farmers who ordered and paid for them prior to the tariffs taking hold. At the same time, Claas plans to scale down production of stock machines (i.e. machines that haven’t been earmarked for a specific customer).
“We’re looking at what is going to be fair for everyone, in light of rising costs, and you can take that in two extremes,” Raby says. “We could say we won’t pass along any of the costs, but that’s detrimental to our business, our ability to do R&D, provide parts, pay our people and all that sort of thing. On the other extreme, we can say we’re going to pass all those extra costs along to the farmer, and that’s problematic as well.”
Raby does caution the company’s plan could change overnight, or even hour-by-hour, based on what President Trump decides to do with EU tariffs. But there is a plan in place.
“We’re going to do everything possible to make sure we live up to our end of the bargain, that’s our ultimate goal,” Raby says. “I can’t say 100% for certain what’s going to happen, but our target is to hold prices for anybody who’s placed a retail order with us. It’s the right thing to do.”
Long term, if the EU tariffs stick, Raby says Claas has options. It could shift more production to its facilities in Canada, since it’s looking likely USMCA trading partners will not be hit as hard. Another option is expanding its combine plant in Omaha. Claas had been looking at that option even before talk of tariffs began.
“We have room to expand [in Nebraska],” Raby says. “The other thing we’re looking at is Argentina has gone the opposite direction. We used to have substantial import duties on machines shipped into Argentina. The current administration there has done a good job lowering that threshold and that is likely to continue. So, we may see an opportunity down the road to shift some production, instead of shipping from Europe into Argentina, from the U.S. into Argentina.”
However the Trump administration plays its tariff cards, Raby hopes U.S. farmers and ranchers will be dealt in and not left out in the cold. A new farm bill and a targeted scaling down of interest rates by the Federal Reserve are two ways the administration could offer relief.
“I would tell Trump to just stay the course,” he adds. “You have a lot of support, but don’t ever forget to reach out, as we do ourselves when we’re thinking about something. We go out and gut check it with the people who matter the most, and that’s the American and Canadian farmers.”
AEM Reaction to Tariff Situation
As the Association of Equipment Manufacturer’s resident “tariff guru”, Johan “Kip” Eideberg is tasked with providing guidance to the association’s members such as AGCO, CNH, John Deere, and others on global government and regulatory issues.
The senior vice president of government and industry relations is a former U.S. Senate employee with a long track record in global trade affairs. Eideberg seems to be, as the cool kids say, simply built for this.
“We support what the President is trying to do. He wants to strengthen manufacturing and bolster our global competitiveness, and we agree with that,” he recently told AgDay host Clinton Griffiths. “We want to build more tractors, more combines and more sprayers right here in America.
“But this is a global industry, and we rely on critical inputs that can only be sourced at scale from suppliers around the world. When the cost of those inputs goes up, the cost of building new equipment here in the U.S. will also go up, and that concerns us, and it concerns our farmers and ranchers.”
Eideberg says the farm equipment industry in North America supports 2.3 million jobs, most of them in rural communities. A lot of those folks also farm or ranch on the side. There’s a deep connection between rural communities and the equipment manufacturing industry, and stewarding that in a positive way is something he takes to heart.
“Their success is our success and we’re going to stick with them every step of the way,” Eideberg says. “We’re keeping a close watch on what’s happening in Washington and we’re pushing hard for a new Farm Bill. We’re hoping farmers will stand shoulder to shoulder with us and deliver that same message to Congress. We know President Trump cares deeply about our farmers, and we have to get a Farm Bill done so we can get on with our business of feeding the world.”
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