In a recent Wall Street Journal article, “Deere’s Plans for Offsetting $500 Million in Tariff Costs,” published May 30, reporter Mark Maurer spoke to Deere & Co. CFO Josh Jepsen on the ag equipment leader’s evaluation and renegotiation of supply contracts and the possibility of adjusting both its supply chain and production plans to weather the incoming storm it predicts from President Trump’s tariffs and impacts on the global economy.
Maurer offered a snapshot of steps the Moline, Ill.-based manufacturer is considering, noting that the company is facing weak demand from the combination of lower crop prices along with higher farmer production costs, and the company’s anticipation of over $500 million in costs from tariffs. The company attributes 60% of its estimated $500 million tariff cost to levies on goods from the European Union, Mexico and China, writes Maurer.
The article also reported that in an effort to obtain preferential duty rates, the company is working to obtain certificates under United States-Mexico-Canada Agreement, or USMCA — the trade agreement between the U.S., Canada and Mexico that went into effect July 1, 2020 during Trump’s first administration. In so doing, the company would be allowed to claim preferential duty rates on certain products exported between the countries.
Deere Actions in Anticipation of $500 Million in Tariff Costs
On May 15, according to Maurer, Deere said it incurred about $100 million in tariff expenses in the latest quarter and expects more than $400 million in additional expenses through the end of its fiscal year in October. At the same time, it was reported that the company booked $7.1 billion in net income for the year ended October 2024, down 30% from a year earlier, and down 19% or roughly $45 billion in net sales.
In his reporting, Maurer offered the following from Deere CFO Jepsen on the company’s consideration of price increases, supply contract evaluations and efforts to find efficiencies and cost savings expected from tariff impacts.
“There’s never a great time for additional cost, but certainly not at a time when the market’s depressed … It does apply pressure to a more challenging time, not only for Deere but the uncertainty that it drives from a customer base,” Jepsen told WSJ. “We may see some things come from China for example to Mexico and other countries … generally speaking, on the margins some tweaking but all within the existing footprint.” The article also noted that changes are also the result of grappling with general inflation. To that end it added that the ag equipment manufacturer has started price increase rollouts, of 2-4% for 2026 model year sprayers and planters, but the company has not added tariff surcharges to prices during the year ending in October, according to Jepsen in the report. Further, Deere reserves the right to adjust the price between phases of order programs, but once a customer places an order, the company honors the price, Jepsen said.
Deere has said that about 80% of the equipment it sells in the U.S. is manufactured there, and roughly three-fourths of its suppliers are based in the country, according to Maurer’s reporting.
The issue of retaliatory tariffs is also a factor that would affect the company’s global exports, and Jepsen noted that since it relates to volume U.S. factories produce, they are remaining focused on export markets and their ability to stay competitive.
The Wall Street Journal added that Jepsen said he expects the company “would revise its estimate on the tariff impact when it next reports earnings in August if there are changes, given the uncertainty of President Trump’s stop-start trade campaign in recent months.”
On May 29, a U.S. trade court blocked most of President Trump's tariffs in a sweeping ruling that found the president overstepped his authority by imposing across-the-board duties on imports from U.S. trading partners. An appeals court has since put a hold on that ruling while the administration appeals.
