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Higher Tariffs On Steel And Aluminum, Abundant Harvests With Low Corn And Soybean Prices And 238 Job Cuts At John Deere Form The Backdrop For A Turn To Used Tractors In The US.
The rules of the game have become tougher, and John Deere, the iconic tractor manufacturer in the US, has reported that it is being harmed by the new regulations. On June 4, 2025, the US doubled to 50% the tariffs on imported steel and aluminum, critical inputs in tractors, harvesters, and sprayers.
This measure increases component costs and pressures manufacturers’ margins, as well as raising the final price of new machines for the producer. The current exception is the United Kingdom, which remains at 25%.
On the other hand, agricultural prices have fallen. The latest WASDE report projects average corn price at US$ 3.90/bu and soybean at US$ 10.10/bu in 2025/26, well below the peak of 2022. With lower revenue per hectare, many producers postpone purchases and delay switching machines.
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In July, Reuters reported that corn and soybean contracts hit 19-year lows in real terms, reinforcing the scenario of tightening cash flow in the field. When income tightens, new takes a back seat to used.
In the equipment retail sector, there are clear signs of this migration. In Tulsa, Oklahoma, auctioneer Josh Enlow reports the arrival of customers who previously only bought brand new and are now looking for refurbished used. The yard of Enlow Tractor Auction has become busier with agricultural and construction machines, reflecting the decline in demand for new ones.
How This Impacted John Deere’s Balance Sheet
John Deere reported net income of US$ 1.289 billion for the quarter ended July 27, a drop of 25% from a year earlier, with net revenue 9% lower. The company lowered its profit target ceiling for 2025 to US$ 5.25 billion (now targeting US$ 4.75B to US$ 5.25B). The company also warned of a larger tariff impact, estimating almost US$ 600 million for the year, exceeding the previous projection of US$ 500 million. The market felt it.
On the employment side, the manufacturer confirmed 238 layoffs at its plants in Illinois and Iowa in August, citing lower demand and fewer orders. This is an additional adjustment following cuts already made since 2024 to align production with retail.
Even so, the industrial weight of the brand remains significant. Deere reports about 30 thousand employees at more than 60 facilities in the US and states that more than 75% of what it sells in the country is assembled domestically. This local industrial cushion helps to soften tariffs on imported machines, unlike competitors with more external production.
New Tractor Price Vs Producer Budget: Why Used Became The Protagonist
Along with high interest rates, the price of new tractors has skyrocketed in the last decade. Estimates from the University of Illinois indicate an increase of 50% to 60% in common models between 2017 and 2023, with some more than doubling. For those harvesting with corn at ~US$ 3.90/bu and soybean at ~US$ 10/bu, investing US$ 250 thousand or more in a machine becomes challenging, so repairing what they already own or seeking a used one becomes the natural path.
The phenomenon is reflected in the data: used inventories and values fluctuated throughout 2025, but the auction and resale channels maintained liquidity, indicating that there are buyers for well-maintained equipment. Dealers and auctioneers report more interest in less powerful and cheaper models, which can handle the harvest without exceeding the budget.
This shift to used also forces the industry to adjust production and offer selective financing to clear stocks of new and used. In practice, it’s the classic cycle of agriculture: when commodity prices fall, capex cools.
China Out Of The American Soybean Game: Tariff And Uncertainty
In March 2025, China imposed retaliatory tariffs on US agricultural products, including soybeans. In April, it raised the rates in response to new American measures. As a result: Chinese traders reduced advance purchases of US soybeans for the new crop, preferring Brazil when there is price parity. To give an idea of the market significance, in 2024 the US exported about US$ 12.6 billion in soybeans to China. Any slowdown there affects the producer’s cash flow.
Industry entities have tightened the alert. The American Soybean Association called for priority on soybeans in bilateral negotiations, stating that retaliations “closed the door” to the largest customer just as harvesting for 2025 begins. Without firm external demand, the producer postpones tractor purchases.
Is Relief On The Horizon? Bonus Depreciation And Domestic Advantage
On the tax front, the new law passed in July 2025 restored “bonus depreciation” of 100%, allowing full deduction in the first year for eligible purchases of machines and equipment acquired and put into service after January 19, 2025. This improves cash flow for those investing, including farmers who decide to upgrade their equipment in the short term. This is pro-sales ammunition for manufacturers with significant local production.
The competitive advantage also has industrial traits. Since a larger portion of machines sold by Deere in the US is assembled in the country, the company suffers less from tariffs on ready-to-use imported machines than rivals with a more intense external footprint. However, it continues to be exposed to higher steel and aluminum costs, now with a 50% tariff. In other words, there are both reliefs and new costs at the same time.
And you, do you think the tariffs and low crop prices will protect the American industry or will they just push more farmers to used machines and maintenance? Leave your opinion in the comments.
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