Cash News
Associate Professor of Finance Eric Eller says that the tariff would trickle down to impact farmers in America, making their products less competitive in global markets, leading them to have to charge more because of higher costs of production.
DUBUQUE, Iowa (KWWL) — Former President Donald Trump is threatening John Deere with a 200% tariff if the company proceeds to move production to Mexico.
KWWL is breaking down what impact the move could have and whether or not it could happen if he’s reelected. We spoke with a finance professor about the potential implications of the tariff – if it were to happen.
John Deere announced in June that it would be moving some of its production from Dubuque John Deere Works to Mexico by 2026.
At a roundtable on Monday, Trump noticed a John Deere tractor behind him. The former president then notified leaders of John Deere that he would implement a 200% tariff on anything John Deere were to sell to the United States – if they make the move to Mexico.
Associate Professor of Finance at Loras College, Eric Eller, weighed in on the former president’s comments about the tariff, saying that it would negatively impact both John Deere and communities in the United States.
Eller weighed in, “It might impact where they decide to locate their production. So, if this tariff were to happen, it might change what they would decide to produce in the U.S. and it would make them less profitable, negatively impacting the communities where John Deere is located.”
Eller believes that it would potentially hurt trade agreements the United States has between Mexico and Canada.
He elaborated, “According to the free trade area that we’re apart of with Canada and Mexico, there are things that we can and shouldn’t do, but there’s no teeth to that. We would be breaking this sort of treaty. It would unravel a lot of progress that has been made over the past decade, in terms of positive relationships between the two countries.”
Eller also said that the tariff would trickle down to impact farmers in America, making their products less competitive in global markets, leading them to have to charge more because of higher costs of production.
Eller explained, “That tariff adds to the price that you have to pay on a foreign good, but it also leads to us having us to pay higher prices on domestic goods. Because of the less competition taking place, companies would end up producing things that they wouldn’t have normally, but they are only able to do so if they can charge a higher price.”
He says that this could lead to family farms becoming unprofitable, causing some to shut down.
99 employees were laid off from the Dubuque John Deere Works facility recently, amid hundreds more across Iowa John Deere manufacturing plants.
A public relations spokesperson for John Deere responded to a KWWL request for comment with the following information:
- “Looking at FY24 numbers, less than 5% of the company’s US sales are manufactured in Mexico.”
- “More than 75% of all sales in the US are from US-based manufacturing facilities. We are a net exporter of US-manufactured Ag & Turf equipment.”
- “We are not “moving production” to Mexico as continues to be reported, instead, we’ve strategically leveraged our footprint in Mexico for cab production (that transition was announced in 2022 and is being completed this year) and now mid-size skid steers and CTLS – by 2026.”
- “We have had a presence in Mexico since 1952. It is not unusual for Deere to consider any number of factors when it comes to leveraging our global footprint, as a global business, while building new products in US factories (like See & Spray in Des Moines and the 9RX tractor in Waterloo).”
- “Layoffs this fiscal year were due to the weakening farm economy in 2024 and a reduction in customer orders for our equipment.”