Josh Enlow buys and sells tractors used every day, filling a vast land in Tulsa, Oklahoma, with hundreds of agricultural and construction machines.
Its customer base has recently changed, as farmers and ranchers who previously bought only new machines now come to the enlow tractor auction interested in used equipment.
“The increase in prices of new ones definitely made people return to the used market,” said Enlow.
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The table price of new tractors has risen at least 60% over the past eight years, according to the University of Illinois Extension, with some models more than doubles in price, costing at least $ 250,000 more than before.
This is bad news for companies such as John Deere, the main supplier of agricultural machinery in the United States. The company has registered record profit two years ago, but President Donald Trump’s rates and trade policies are making the market more challenging and unpredictable for the business and its customers.
One of the largest manufacturers in the country is in a worse situation now than six months ago. Last month, John Deere reported that net income in the latest quarter fell 29% over the previous year. Higher tariffs, especially on steel, but also about aluminum, cost the company $ 300 million, with almost another $ 300 million expected by the end of the year. This summer, the company fired 238 employees in factories in Illinois and Iowa.
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Still, John Deere is exactly the type of industrial power that Trump says more in the United States. The company, headquartered in Moline, Illinois, manufactures agricultural equipment since 1837. Its tractors, gaps and green and yellow sprayers help farmers feed the country and produce billions of dollars in export harvests.
The company employs 30,000 workers at 60 facilities across the country and said more than 75% of its machines are set up in the United States. Only 25% of the components used in their products come from abroad, John Deere said.
The demand for new agricultural equipment is mainly determined by crop prices. When prices are high, money farmers buy new equipment. When prices fall, they keep old tractors or consider the market more used.
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Prices are currently low, with corn selling 50% of peaks seen in mid -2022. Soy prices fell 40% in the same period.
John Deere said he hoped sales of large agricultural machinery – which generate most of the revenue – fall between 15% and 20% in 2025, and that the bad situation continues by 2026.
John Deere declined to comment.
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In the last teleconference of results, Josh Beal, director of investor relations, said customers are “operating in increasingly dynamic markets” due to high interest rates and a global change of trade environment that “generates caution when considering capital purchases”.
Projections of the Department of Agriculture indicate that corn and soybean harvests should reach almost record levels in this fall. This is good if there are many buyers – US farmers exported $ 13 billion in soybeans to China in 2024 – but new tariff policies weakened Chinese demand.
After Trump announces heavy rates on Chinese products this year, China imposed retaliatory rates on American soy in March. Soybean exports to China fell 51% this year, and the country did not make early purchases for the next crop. American producers should receive $ 3.4 billion less for soy than last year, according to the Department of Agriculture.
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For many producers, prices are so low that they will be harmed by Acre planted.
“How can companies and farmers plan in the long run when they don’t know what the cost of inputs will be or what the market will be in the coming weeks?” Asked Tad Dehaven, researcher at Cato Institute, a Think Tank that defends free markets. “These businesses, be it John Deere, a craft brewery or any other, are trying to browse it. They are trying to do their best to cut costs and resist.”
New tractors are one of the highest costs for farmers, so to save them they choose to fix their machines or buy cheaper or less powerful models.
But some of John Deere’s problems began before changes in tariffs. At the beginning of last year, there were an excess of company machines at dealers. In response, the company operated its factories well below capacity, firing more than 2,000 workers. It also offered more attractive financing rates to clean the stock. At the time, the company said it would be a short -term expense to boost a long -term recovery by 2025 and 2026.
“We fundamentally believe that these actions will lead to more favorable cycle dynamics than in previous recessions,” said John May, CEO of the company, in a results teleconference in August 2024.
Instead, sales should remain weak in the near future.
Kristen Owen, director of Oppenheimer & Co., still thinks that 2026 will be a better year for John Deere. Changes in accelerated depreciation in the recent tax and spending law can help increase company sales. The rule allows farmers to immediately receive a large tax deduction for equipment purchases.
And like John Deere competitors, such as Kubota, Fendt and Mahindra, make more machines abroad, they should be more affected by fares about foreign machines.
Changes in accelerated depreciation will boost sales, Owen said. John Deere is doing well in some foreign markets, he added, and its construction equipment business can gain strength next year.
“The expectation is that, even if the demand is weak, there is still growth in profits in 2026,” he said.
But while widespread uncertainty persists, farmers will hesitate to make expensive shopping. They do not know when, or if, large -scale exports to China will start over, or if a new agricultural law will increase subsidies or income support programs. They do not know if the Federal Reserve will cut interest rates or if steel prices will remain high.
All in the agricultural sector are used to difficult risks, such as heat, rain, pests and diseases, which greatly influence profitability, Owen said. What is being even harder to control is what she called the pen, the risk that, with a polyte’s pen, everything changes again.
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