Tariffs and weak demand slash Deere’s quarterly profit by 25%

Farm machinery giant Deere said President Donald Trump’s tariffs have taken a chunk out of its margins, sending third-quarter profit plunging and prompting the company to slash annual earnings forecasts.

The world’s biggest maker of tractors, combines, and mowers said in a Thursday statement that higher import levies have made it more expensive to produce the machines, while customers “remain cautious amid ongoing uncertainty”.

It is the second time in two quarters that Deere, best known for the green and yellow tractors made by its John Deere brand, has reported a steep drop in earnings. This time, net income fell to $1.29 billion for the third quarter, down 25% on the same period last year. Net sales fell 9% to $10.36 billion from 2024 levels.

Margins in the company’s construction equipment division were hit especially hard, where net sales only fell 5% but operating profit plunged 47%. This was “primarily due to unfavorable price realization and higher production costs caused by higher tariffs,” it said.

Trump’s tariffs are already expected to cost Deere more than $500 million this year, per a May statement. When the government imposes levies on imported parts or materials like steel or electronics, manufacturers have to pay extra fees to bring them into the country. They can either absorb those costs or raise prices.

The latter option is especially tricky for Deere and farm equipment makers, because the industry is already struggling after crop prices for things like wheat, corn and soybeans fell in recent months. As of mid-July, corn prices had fallen more than 30% since mid‑2022 driven by a bumper crop and weaker global demand, per Reuters. Farmers are also increasingly opting to rent tractors rather than buy them, due to weaker farm incomes and high interest rates.

On Thursday, Deere cut its annual profit forecast to between $4.75 billion and $5.25 billion, down from the prior range of $4.75 billion to $5.50 billion.

Chief Executive John May said the company is limiting how much equipment it makes to stay nimble. “By proactively managing inventory, we’ve matched production to retail demand, enabling our company and dealers to respond swiftly to market shifts and customer needs,” he said.