In an April 30 article, “Relatively young fleet may allow farmers to delay equipment purchases amid tariffs,” Leigh Anderson, senior economist at Farm Credit Canada (FCC) offered perspective on the global trade scene and the uncertainty farmers are facing. 

Excerpts from Anderson’s observations on the economic impact of the tariff situation have been offered in the following 5 summaries. 

  1. Global trade disruptions have caused significant challenges for Canadian agriculture.

Anderson notes that as businesses prefer stability, the constant tariff changes create confusion, making it difficult to plan, causing widespread uncertainty about the full impact of tariffs. He says the agriculture industry is finding some relief in the CUSMA exemption from the 10% blanket tariffs, and the 90-day delay in U.S. reciprocal tariffs.

  1. Farm equipment manufacturers still face a lot of uncertainty. 

Outside the automotive sector, it's less known that steel and aluminum tariffs are already in effect, offers Anderson, adding that following CUSMA rules can be complicated for parts and components used in manufacturing.

“Canada has a strong, primarily niche agriculture equipment manufacturing sector, but most equipment is sourced from the U.S.,” says Anderson. “The U.S.–China trade war has significantly increased the cost of components from China, creating uncertainty in the farm equipment industry. This raises concerns about the availability and cost of equipment needed this year and beyond.”

Addressing steel and aluminum tariffs, FCC’s Anderson says these Trump Administration tariffs have significant consequences for the farm equipment industry. He called attention to the reality that while the tariffs were intended to boost U.S. steel production, the tariffs actually raise costs on raw materials causing the price of new equipment to rise. 

“This impacts demand for farm equipment and has broader implications for farmers and manufacturers,” he says.

  1. New orders are declining with a shift to used equipment.

“Uncertainty is deterring Canadian farmers from buying new equipment, leading to reduced pre-orders,” says Anderson. “Instead, farmers are maintaining existing equipment and investing in used machinery. New equipment purchases are likely to be delayed until tariff issues are resolved, driving demand and prices for used farm machinery.” He notes the declining U.S. farm equipment manufacturing sales, down by 18.4% in the first 2 months of this year, while Canadian sales fell by 5.7%. 

  1. The aging fleet of Canadian farm equipment creates short and long-term issues.

Anderson’s assessment is that farmers’ replacement decisions are being adjusted due to rising farm equipment prices resulting from trade disruptions. 

“Reduced demand for farm equipment will impact the age of the Canadian fleet. However, the fleet can likely withstand reduced sales in the short term as the estimated age of the fleet is now at a multi-year low for most equipment types (see figure below). In the longer term, investment upgrades to the Canadian equipment fleet will be necessary.”

Farm-Equipment-Age

Proxy age of new farm equipment replacement cycle

5. Monitoring key trends will help the agricultural industry maintain perspective. 

Anderson offered 3 trends to monitor. First is the outlook for tariffs and potential trade deals ahead. Second is farm revenue to which he offers the following assessment on hard to predict crop prices and revenue, writing: 

“Profitability is getting tighter due to ongoing trade disruptions, impacting both commodity prices and costs. Even without tariffs, profitability projections for the year are already looking tight. Price volatility will continue as long as trade disruptions last. This year, prices are influenced more by geopolitical policies than by supply and demand, and these policies can change quickly. The good news is with this volatility there will be opportunities for farmers to secure higher prices.”

The third trend worthy of attention, and of particular interest to equipment dealers, according to Anderson, pertains to strategic replacement decisions — a made in Canada focus. To this he forecasts in some operations, disruption in annual equipment upgrades could cause long-term issues. 

“Canadian dealers and manufacturers might benefit by promoting Canadian-made equipment, which could be less affected by tariffs if more domestic steel and components are utilized,” writes Anderson. “Farmers need to strategically assess their unique equipment needs to minimize disruptions to their replacement cycle. Dealers can help identify equipment with the least manufacturing cost increases for replacement this year.”

FCC’s senior economist offered this bottom line assessment of the present situation: “Equipment currently being manufactured and used this crop year may have higher costs due to tariffs on components impacting overall manufacturing expenses. However, the 2026 equipment models face the most uncertainty right now. The entire industry is eagerly waiting for a resolution to the uncertainty and trade disruptions.”