Dive Brief:
- Former President Donald Trump said at a farm-focused campaign stop he would slap a 200% tariff on John Deere if the agricultural equipment maker moves forward with plans to shift some U.S. manufacturing to Mexico.
- Trump called on the tractor maker to abandon plans to move production at a roundtable with farmers in western Pennsylvania: “I am just notifying John Deere right now that if you do that, we are putting a 200% tariff on everything that you want to sell into the United States.”
- Under the U.S.-Mexico-Canada Agreement, automakers can benefit from lower tariffs if production is centered in North American countries. Deere announced in June that it would shift some production from Iowa to a new facility it is building in Ramos Arizpe, Mexico, approximately three hours south of the U.S. border.
Dive Insight:
Wide ranging tariffs have become a central aspect of the Trump campaign playbook as the former president positions trade policy as a path to protect American jobs and boost U.S. manufacturing. But the proposal to slap tariffs on Deere is the first time Trump has targeted an agricultural equipment maker.
“This is just the beginning,” Trump said of Deere’s plans to move production. “All of a sudden, they’re not going to be in the country anymore. They’re going to have to pay a very big price.”
Trump has proposed up to 20% tariffs on virtually all imports and duties of 60% or more on goods from China. He’s also proposed a 200% tariff on auto imports from Mexico, falsely claiming that China is building factories in the country to skirt trade policies.
Deere’s planned factory in Mexico, set to be operational in 2026, would take over production for construction equipment such as skid steer loaders and compact loaders. The equipment was previously made at the company’s Dubuque Works factory in Iowa, which has been hit by a series of layoffs.
This isn’t the first time the agricultural equipment giant announced it would move some production to Mexico. Deere made a similar move in 2022, saying it would move some capacity from its Tractor and Cab assembly operations facility in Iowa to the Mexico plant.
As the company faces blowback over its plans, Deere has looked to highlight its commitment to U.S. manufacturing, touting investments of more than $2 billion in U.S. factories since 2019.
“In order to position our U.S. factories to undertake these highly value-additive activities it is sometimes necessary to move less complex operations, such as cab assembly, to other locations,” the company said in regards to moving some production to Mexico.
A proposed 200% tariff on Deere or on any auto exports out of Mexico would likely run into trouble under the U.S.-Mexico-Canada Agreement that Trump negotiated in 2018. The agreement promotes manufacturers to move production to North American countries including Mexico by providing duty-free access to the United States.
Deere has cut more than 1,800 workers across its Midwest factories and offices this year. Food processors have also moved to close factories or curtail production, with Tyson Foods and Cargill also announcing layoffs.
Trump’s comments speak to growing anxieties in rural America, where large manufacturers have hollowed out factories and made broad job cuts in recent months to contend with a slowing economy. Both sides of the political aisle have made manufacturing central to campaign messaging as a way to reach voters in swing states, with Vice President Kamala Harris set to announce new incentives to boost domestic production this week.
Congressional lawmakers have also seized upon manufacturing job cuts. In a letter to John Deere CEO John May, Republican Sen. Marco Rubio of Florida wrote that companies “have a responsibility to ensure businesses are able to operate and thrive within the American economy.”
“America needs a strong manufacturing sector to build the tractors, combines and other implements that make our country’s agricultural self-sufficiency and leadership possible,” Rubio wrote.