Is dramatically raising tariffs the way to get American companies to keep their operations in the country? Is just the threat of much higher tariffs the way to get those companies to change their plans? We are about to find out.
Donald Trump, the former president and the Republicans’ nominee for president for a third time, threatened to raise tariffs by 200% on companies like John Deere.
On Monday, September 23rd, Trump held a campaign rally in Smithton, Pennsylvania, one of the pivotal “swing states” that could help determine whether Trump returns to the White House or whether his Democratic opponent, Vice President Kamala Harris, will.
Trump sat in front of John Deere tractors that had been placed behind him as a backdrop for his discussion on agricultural issues. Regardless of whether Trump planned to announce his tariff threats targeting John Deere or whether he ad libbed his remarks, the former president declared that the giant agricultural company would pay a price if it goes through with its plans to shift some production operations out of the United States to Mexico.
“I’m just notifying John Deere right now: If you do that, we’re putting a 200% tariff on everything that you want to sell into the United States,” Trump said.
Tariffs were part of Trump’s time in office, particularly versus China. The Biden administration continued some of them after Trump left office.
John Deere has announced a series of layoffs over the past few months as it adjusts production following a second straight year of projected farm income declines in the United States.
RELATED: American Farmland Owner has detailed the impacts of John Deere’s layoffs in agricultural states like Iowa and Illinois. Read that here.
The company knows that farmers are likely to put off big purchases, like a new $300,000-1,000,000 John Deere combine, when the USDA reported that their incomes fell by an expected 20.9% in 2023 compared to 2022 and could fall another 7.2% this year.
John Deere responded to Trump’s tariff threat. A spokesperson said that the company makes about 5% of its products in Mexico that get sold in the United States.
The company’s statement also took issue with characterizations that John Deere is “moving” operations to Mexico by saying that is has had operations in Mexico since 1952.
Whatever the wordage that is used, the company plans to increase production in Mexico for some of its goods like cabs and skid steers.
The tariffs fit Trump’s “America First” theme as he works to convince voters that higher tariffs will make American companies produce their goods in the country and also make foreign-made goods more expensive and less appealing to consumers.
Some economists don’t see increased tariffs having the effect that Trump claims that they will.
In fact, some believe that they will have the opposite: American companies will not stop making some of their products in other countries, and American consumers will just end up paying more money for goods.
And Fortune had comments from billionaire businessman Mark Cuban who said that tariffs would “destroy” companies like John Deere. Read that here.
