On Monday, the former President Donald Trump made a pledge to implement a steep 200% tariff on all imports from John Deere to the U.S. should the firm proceed with its plans to transfer some of its manufacturing processes to Mexico.
Earlier in the year, John Deere disclosed its intention to cut approximately 600 jobs across three of its facilities by August 30, in line with its strategy to relocate the production of its skid steer and compact track loaders to a facility in Mexico by the end of 2026. These job cuts would affect its operations in Davenport and Dubuque in Iowa, and East Moline in Illinois.
Trump, speaking at a rally in western Pennsylvania, stated, “As you know, they’ve announced a few days ago that they are going to move a lot of their manufacturing business to Mexico. I am just notifying John Deere right now that if you do that, we are putting a 200% tariff on everything that you want to sell into the United States.”
This move marks the first instance Trump has threatened to levy such a high tariff on an agricultural equipment producer, despite having previously warned automobile manufacturers about similar consequences for relocating production to Mexico.
John Deere provided reasons for its decision to shift production, emphasizing the move as a means to “optimizing our factories for future products, making our operations more efficient and taking advantage of locations in the U.S. and globally, with a growing labor force.”
The company highlighted its recent investments exceeding $2 billion in its U.S. factories since 2019. This includes establishing new production lines and facilities across various states for a range of products, from X9 combine assembly in East Moline to new tractor line assemblies in Waterloo, Iowa, and a new excavator factory in Kernersville, North Carolina.
John Deere’s statement further explained the rationale behind relocating less complex operations, such as cab assembly, to other locations. “In order to position our U.S. factories to undertake these highly value-additive activities it is sometimes necessary to move less complex operations, such as cab assembly, to other locations,” the company stated. It also noted that “This includes moving the production of some models of our skid steer loaders and compact loaders to our factory in Mexico, a facility that has been an important part of our global operation for nearly 70 years.”
In the past year, John Deere has navigated economic challenges, with high interest rates and reduced commodity prices leading to a projected 24% decrease in farmer net income by 2024. This economic environment has prompted farmers to postpone new equipment purchases, necessitating John Deere to adjust its production and optimize operations in alignment with the current market demand.
