Aiming to stabilize rising equipment prices driven up in part by his own tariffs, President Donald Trump on June 1 temporarily slashed a 25% import tax on foreign-made farm equipment to 15% until the end of 2027. Manufacturers that source 85% of steel domestically qualify for a 10% rate.
“Especially at a time when our nation’s farmers are under increasing pressure, this action represents an important step toward lowering input costs, strengthening supply chains and supporting American farmers and manufacturers,” said Kip Eideberg with the Association of Equipment Manufacturers.
“This proclamation is an encouraging sign that the Trump administration recognizes both the complexity of reshoring production and the need to provide manufacturers with the runway to expand domestic capacity,” said Eideberg, who is senior vice president of government and industry relations at AEM.
With many farmers still deferring equipment purchases, the ag equipment industry remains sluggish. AEM documented a 21% drop in U.S. tractor sales in May compared to the same month in 2025, with combine sales down 56%.
Manufacturing costs are higher. In its latest earnings call, Jim Nickolas, chief financial officer at CNH Industrial, estimated that ag machinery-related tariffs cost the company $120 million. Likewise, Caterpillar expects to spend between $2.2 billion and $2.4 billion on tariffs this year.
Conversely, used equipment prices are sliding down. Sandhills Global’s May market report documented notable year-over-year decreases for:
- compact and utility tractors, down 28.25%
- planters, down 26.36%
- sprayers, down 19.18%
Need for foreign-made equipment
U.S. farmers rely on imported farm machinery. For example, USDA’s Economic Research Service estimates 60% of small utility tractors are foreign-made. Many components for machines made in the U.S. are imported, making it difficult for brands to meet the 85% steel threshold (smelted and poured, or smelted and cast steel, or aluminum by weight) to qualify for further reduced import fees.
Even so, industry experts laud any fee reductions as positive because these added import expenses are passed to farmers who are already struggling. Farm bankruptcies jumped monthly by 82% in April, pushing them to 130% year over year.
“If you talk to a corn producer or a soybean producer, they’re all looking at pretty tight profits — in fact, losses in some cases, but for government payments that they’re receiving,” said Joseph W. Glauber, former USDA chief economist. “Machinery is a tough thing in the sense of it’s hard to gauge the immediate impact of high machinery costs because you can put off buying for a year. … Farmers tend to buy machinery when they’re flush.”
With no end in sight to the ag economy’s downturn, Bryan Riley, director of the National Taxpayers Union’s Free Trade Initiative, said more must be done to alleviate financial stress throughout the agricultural industry.
“The administration needs to do something about tariffs on imported steel,” Riley said. “If you’re manufacturing equipment in the United States, you need access to parts and supplies and steel. We are one of the world’s high-cost islands for steel because of current tariff policies. The tariffs are as high as 50%. The average [steel] tariff last year was around 30% when you factor in which countries this deal came from.”
Over the last decade, machinery’s price spike is correlated to Trump’s steel tariffs, which he set at 25% during his first term. The Biden administration kept them in place. Then Trump doubled them last year to 50% for some countries before subsequently pulling back. He recently slashed them further to 15%.
Since 2016, machinery costs per acre jumped from $113 to $171 in 2024, a 51% increase, according to a Farmdoc Daily analysis.
Striving for price stability
Because machinery is a high-ticket purchase, cost predictability is imperative for farmers to budget long-term fleet decisions. Dealers also require stability. Volatility makes it difficult to quote accurate prices, forcing local businesses to eat high costs amid fluctuating tariff rates.
The reduced 15% import tax, which remains in effect through 2027, provides short-term pricing certainty, ensuring costs won’t increase suddenly after quotes are issued.
This stability “benefits the whole supply chain — the farmers, the dealers and the manufacturers,” said Daniel Fisher, senior vice president of government affairs at the Associated Equipment Distributors. “It gives some certainty to the situation.”
Even with the June reduction, fallout from the Trump administration’s farm equipment tariffs is expected to linger. Riley said he worries those tariffs might prompt brands to relocate manufacturing operations outside of the United States.
In September, Claas moved production of its Lexion 8000 Series combine from Omaha, Neb., to Germany, citing untenable tariff-related import costs. Meanwhile, Riley said tariffs are harming U.S. reliability, prompting international trade partners to bypass domestic supply chains entirely, while reducing their purchasing power for U.S. agricultural exports.
They’re also stoking ill will toward U.S. businesses. For example, China slapped a 10% retaliatory tariff on American-made farm equipment in February 2025 before suspending them in November. Riley said he expects those duties to persist long after the current import taxes are rolled back.
Research supports these expectations. Ag market share permanently moved away from U.S. producers following Trump’s 2018-19 trade war with China, according to Purdue University’s Global Trade Analysis Project. Meanwhile, steel tariffs heavily inflated equipment prices.
“If the current policies remain in effect, the clear impact is going to be to discourage production of ag equipment in the United States,” Riley said. “However, if we learn our lesson, I think that there’s a great opportunity to get rid of some of those tariffs on inputs and raw materials to expand production in the United States The big lesson is that fewer tariffs mean more domestic production. That’s the opposite of the policies that we’ve seen implemented so far, for the most part.”