Putting aside the daily ramblings of Donald Trump, such as taking over the Gaza strip and replacing the bombed-out homes with his version of the French Riviera. In the process, displace the estimated 2 million Palestinians who had the impression a peace treaty was in place and they could move back home, following constant bombings and countless deaths over a relentless 16-month period.
Before the farm equipment industry or anybody else gets to enjoy Donald Trump’s answer to the French Riviera, many in the farm industry may need to factor in presenting higher retail prices to farmers across the globe if we reach the point where tariffs on US trading partners begin to kick in.
The first orders signed by President Trump to impose stiff tariffs that will affect US farmers initially include duties of 25% on imports from Mexico and Canada, as well as 10% on all imports from China.
These three countries make up nearly half of all farm exports by the US, and they have indicated they would impose retaliatory measures against the US. This is the start of farm industry manufacturers being drawn into the trade war with at stake exports of US$30 billion in agricultural produce to Mexico, US$29 billion to Canada and US$26 billion to China.
As an initial response, the Canadian government released several counter-tariffs at 25% on US imports of around CA$30 billion that include agricultural produce, equipment, lawnmowers and hay-making mowers.
And of great concern for US farmers is that over 80% of their fertiliser ingredient, potash, is imported from Canada. Tariffs of 25% would undoubtedly be passed onto the end users.
And while the Canadian and Mexican markets have since been given a 30-day reprieve from the tariffs taking effect, China has retaliated with a 10% tariff on all US goods entering their country, effective from 10 February 2025. Escalating trade tensions between the world’s two biggest economies.
Economists confirm that levying tariffs on goods that farm equipment manufacturers depend on will drive up costs, disrupt supply chains and expose farmers to increased threats through retaliatory tariffs.
How tariff imposts are liable to bite
This is not the first time President Trump has imposed tariffs.
During Trump’s first term as President, in 2018 he imposed tariffs on steel and aluminium from Mexico and Canada. Both countries then placed retaliatory tariffs on more than US$15 billion worth of goods imported from the US. Also, during that term, it is estimated the United States lost US$20 billion in annual farm exports when China hit back against a slew of US tariffs between 2018 and 2019.
This time around, China has slapped tariffs on more than 50 US product lines including farm tractors, sprayers and planters, along with other products such as mowers, sugarcane harvesters and combines, according to China’s Ministry of Finance.
China’s tariffs come as major US farm equipment makers struggle with sluggish demand, following the 2022 sales peak that has been followed by low farmer sentiment to continue buying heavy equipment that many see as overpriced.
According to industry analysts, CNH Industrial has already indicated in its quarterly earnings call, that any potential tariff costs on components from Mexico, Canada and China, affecting about US$400 million in imports, would be passed onto end users through immediate pricing adjustments.
Meanwhile CNH small to midsize tractors are beating the first round of tariff calls as they are built in Turkey, Italy, India and South Korea. With high-powered tractor models, the major lines built in the US.
While CNH Industrial considers all scenarios from tariff impacts that could take 12 to 18 months to settle down, it did raise a brighter note that US farmers may decide to buy now to avoid paying hefty price increases that could eventuate later.
