Legacy tractor manufacturer John Deere has announced layoffs at three Midwestern plants as the company struggles with weakening sales and mounting tariff costs.
“The struggling ag economy continues to impact orders for John Deere equipment,” the company said in a statement. “This is a challenging time for many farmers, growers and producers, and it directly impacts our business in the near term.”
Why It Matters
The long-term impact of tariffs on the U.S. economy is still being debated, but agricultural leaders have warned the new duties could raise costs and threaten access to vital export markets. Since John Deere’s customer base is primarily farmers, instability in the sector is directly tied to the company’s performance.
What To Know
The layoffs were initially revealed in a set of Worker Adjustment and Retraining Notification (WARN) notices that turned out to be inaccurate. However, John Deere later confirmed that 238 workers would be affected across three facilities:
- Harvester Works in East Moline, Illinois: 115 workers, final day August 29
- Seeding and Cylinder in Moline, Illinois: 52 workers, final day September 26
- Foundry in Waterloo, Iowa: 71 workers, final day September 19
John Deere told Newsweek that the workforce cuts are due to “decreased demand and lower order volumes.”
The announcement followed the release of the company’s third-quarter results, which showed a 26 percent year-over-year decline in net income to $1.3 billion, and a 9 percent drop in net sales and revenues to $12 billion. In its earnings call, executives pointed to weaker commodity prices and higher tariff costs as key factors.
Josh Beale, John Deere’s Director of Investor Relations, said tariff-related expenses totaled about $200 million in the quarter—nearly $300 million for the year to date. The company now expects tariffs to cost nearly $600 million this fiscal year, up from a previous $500 million estimate. Higher tariff rates on the European Union and India, along with increased U.S. duties on steel and aluminum, were cited as major drivers.
Other U.S. manufacturers, including AGCO and CNH Industrial, also reported declining sales during the same period, attributing part of their challenges to tariffs and softer industry demand.
According to Goldman Sachs strategists, aggregate second-quarter earnings per share for companies in the S&P 500 rose 11 percent year over year—well above the 4 percent growth forecast—suggesting that tariff pressures are hitting specific industries more than the economy as a whole.
To counteract some of these effects, John Deere has announced a $20 billion investment in its U.S. manufacturing operations over the next decade.
What People Are Saying
Josh Beale noted: “Recent ag policy legislation has been positive and potential developments in trade agreements and demand for renewable fuels could also be supportive. However, until there’s more stability in the industry, we’d expect customers to continue to take a measured approach to capital investment.”
John Deere told Newsweek: “As the entire ag sector navigates these challenges, John Deere continues to provide customers the high-quality equipment they deserve while strengthening the foundations of U.S. manufacturing. We remain committed to keeping our U.S. manufacturing footprint strong, viable and competitive.”
The White House, responding to the Goldman Sachs report on S&P 500 earnings, said: “Under President Donald J. Trump’s bold pro-growth policies, American businesses are thriving like never before—shattering earnings forecasts and propelling the stock market to continued record highs.”
CFRA Research analyst Jonathan Sakraida told Reuters: “Tariff uncertainty and deflated commodity prices have made farmers increasingly cautious in spending decisions and more hesitant to accept higher machinery prices.”
What Happens Next
John Deere said affected employees may be eligible to return to their factories in the future and will receive employment and health care benefits depending on their length of service.
