John Deere is the kind of homegrown, domestic manufacturer President Donald Trump claims to support, yet his tariffs and hostility toward China are threatening its bottom line.<\/p>\n
The Moline, Ill.\u2013based tractor and agriculture machinery manufacturer boasted a record profit just two years ago, but since then its luck has turned. That\u2019s partly because of instability related to tariffs and an economic fight with China. Last month, the company said it would lay off 238 production employees in Illinois and Iowa, citing<\/a> \u201cdecreased demand and lower order volumes.\u201d<\/p>\n In Q3, the company\u2019s net profit fell by a quarter compared with the same time last year, and its worldwide net sales and revenues fell<\/a> by 9% to $3.9 billion, down from $5.8 billion last year. The company also lowered its guidance for its annual net profit through the end of the year.\u00a0<\/p>\n On the company\u2019s most recent earnings call, investor relations director Josh Beale said there were \u201cpockets of optimism\u201d across John Deere\u2019s business, but added customers may be feeling the sting of tariffs and instability.<\/p>\n \u201cGiven challenging industry fundamentals and evolving global trade environment and ever-changing interest rate expectations, our customers are operating in increasingly dynamic markets, which naturally drives caution as they consider capital purchases,\u201d Beale said.<\/p>\n Agriculture is an industry in constant flux. Elevated crop prices mean farmers can consider buying new tractors and equipment, but in challenging times they may buy used equipment or hold off on a big purchase. New tractors can cost tens of thousands of dollars depending on their capabilities, and many farmers rely on credit<\/a> for these purchases. Prices are low for the two main American crops: corn and soybeans. Corn is selling for 50% less than its price in 2022, while prices for soybeans are down 40%, the New York Times reported<\/a>.\u00a0<\/p>\n John Deere\u2019s customers, apart from the confusion of tariffs, are also facing headwinds from an economic battle with China. In response to Trump\u2019s tariff escalations, the world\u2019s second-biggest economy retaliated with tariffs on U.S. soybeans; last year, China imported $13 billion worth\u2014or about equal to the market cap of John Deere competitor Kubota. Soybean imports to China are down by 51% this year, and the country hasn\u2019t made any advanced soybean purchases for the upcoming harvest, the NYT reported.<\/p>\n If John Deere customers make fewer equipment purchases, the cutback will hit the company\u2019s domestic manufacturing, which makes up 80% of its U.S. sales<\/a> and a quarter of its international sales.<\/p>\n John Deere did not immediately respond to Fortune\u2019s request for comment.<\/p>\n Still, there may be a silver lining to Trump\u2019s policies for John Deere. The company could benefit from bonus depreciation changes in the One Big Beautiful Bill<\/a>, passed in July, which gives farmers a tax break on equipment purchases.<\/p>\n Because of its robust domestic manufacturing, the company may also be more immune to tariffs on foreign imports than competitors Kubota, Fendt, and Mahindra, which manufacture more of their products internationally.\n<\/p>\n