Donald Trump’s plan for 200% tariffs on the agriculture equipment manufacturer John Deere would disrupt the supply chain and ultimately hit consumers’ wallets if the former president is reelected, a Mexico trade expert said.
“Tariffs cause the cost of goods to rise and demand to drop, and it’s just going to cause the cost to rise; the pocketbook of the consumer is what gets slammed,” Jorge Canavati, principal at logistics provider J. Canavati & Co., told FreightWaves in an interview.
On Monday, Republican presidential candidate Trump said he would impose a 200% tariff on imports of John Deere tractors and equipment into the U.S. if the company moves jobs from a plant in Iowa to Mexico. Trump discussed the tariffs at an agricultural policy event in Smithton, Pennsylvania.
“As you know, [John Deere] announced a few days ago that they are going to move a lot of their manufacturing business to Mexico,” Trump said at the event. “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.”
Moline, Illinois-based John Deere (NYSE: DE) is a global farm and construction equipment manufacturer. The company has more than 100 factories around the world in 30 countries.
“[John Deere] thinks they’re going to make products cheaper in Mexico and then sell it for the same price as they did before, to make a lot of money by getting rid of our labor and our jobs,” Trump said.
John Deere has four factories in Mexico, including the cities of Monterrey, Ramos Arizpe, Saltillo and Torreon. The company inaugurated its first facility in Mexico in Saltillo in 1984. In June, the company said production of some of its industrial agricultural equipment would be moved from Waterloo, Iowa, to a plant in Ramos Arizpe.
The decision to move operations was driven by labor market costs, John Deere officials said.
“John Deere’s plan to bring new product programs to our operations in Waterloo, Iowa, makes it necessary to consolidate the manufacturing of cabs from [Waterloo] to [Ramos Arizpe]. The decision to move cab production ensures the company can balance workforce needs within the tight labor market, while also ensuring Waterloo can open up floor space to manufacture new products,” the company said in a statement emailed to media.
The Waterloo plant employed about 1,500 people before the announcement to move production to Mexico, including 1,100 production workers. The company has eliminated 950 jobs from Waterloo since June, according to KCRG.
When one country imposes tariffs on another country, that country often retaliates by imposing its own tariffs in response, Canavati said.
“Case in point is when China countered us for the initial round of the Trump tariffs,” Canavati said. “When Trump levied tariffs against goods from China [in 2017 and 2018], China then slammed U.S. agricultural exports with tariffs. China is one of the most important buyers of U.S. agricultural goods. The losses to the U.S. farmers were just mind boggling. The U.S. government came in and told the farmers, we’ll subsidize your losses. We as taxpayers got a double hit, with import tariffs and then out of our tax dollars we have to pay the subsidies to U.S. agriculture exporters.”
Trump has also talked about levying tariffs of more than 60% on China-made goods if he wins November’s election.
“I’m not looking to hurt China. I want to get along with China. I think it’s great. But they’ve really taken advantage of our country,” Trump said in February in an interview with Fox News.
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William Travis
There is only one American owned heavy truck manufacturer left, Paccar. There are only two Americn owned tire companies left, Goodyear and Cooper but Goodyear owns Cooper. The list goes on and on. So what if a foreign owned company build some product here, the real profits go back to the home country. Do you really think that foreign countries truly have America’s best interests at heart? Do you want to start taking orders from the Chinese, Koreans, Japanese, Germans, Swedes etc? Our American corporate leaders and our fearless have sold our souls so that they can line their pockets.
Charles Fulbright
Here’s a different take. I get why President Trump wants to impose the tariffs to protect American workers. How about instead of creating yet another trade war with a Western hemisphere nation and trading partner, the US Govt creates incentives to bring more of the production in these other countries BACK to the USA? That seems like it would be more of a win-win. Consumers would still get the best of the best in quality, and it would create, or at least replace some of those lost jobs in the USA. They could do something like a minimal corporate tax rate on the goods produced here in the USA that were brought back from foreign nations.
Ken Strom
“President Donald Trump’s plan for 200% tariffs on the agriculture equipment manufacturer John Deere would disrupt the supply chain and ultimately hit consumers’ wallets, a Mexico trade expert said.”
This is only true should John Deere move forward with moving their plants to Mexico.
The trade expert does not give their expertise should John Deere decide NOT to move their plants to Mexico and keep them in the US, which would actually be Trump’s goal.
Paul Massingill
Here’s another thought. John Deere should be punished for moving its factory to Mexico. The U.S. is where John Deere made its wealth and now they want to betray the good people of this country and move out? I’m with Trump – 200% tariff and you can like it or leave it. BTW, this country hummed along during his first term. Maybe it should be left to a man that knows what he is doing. The supply chain is a mess with or without JD.
Tim Reis
This is not a news article. It is an opinion of a hypothetical outcome. Keep your opinions to yourself and report factual information.
Tim Ringer
Here’s a thought, keep jobs here in the US. We have lost way to many jobs in the US, we don’t really manufacture anything anymore and have become a consumer country.
Billy G. Gruff
Caterpillar used to be the best in the world until their board of directors decided that the stock prices and profits were more important than the quality of the equipment they build. Deere is headed in the same direction, corporate profits are more important than their customers OR their country. American industry won WW 2 and made us the greatest country on earth. Our great leaders have sold us down the river by giving away our industry to foreign countries.
Stephen Webster
A 20% tariff on Mexican made farm equipment should be the Max and let farmers bring equipment from dealerships in Mexico with a 10% tariff on the first $100 000 per year per farmer and the balance at 20% to help smaller farmers to survive
This will get the dealerships and the company attention as this still help short line companies to survive as co ops in rural Mexico. We should do the same for farm equipment made in India and 30% on farm equipment from China in my opinion