John Deere Sees Big Drop in Quarterly Profit as Tariffs Send Costs Soaring

John Deere (NYSE:DE) turned in its third-quarter results yesterday, and while the numbers were not exactly disastrous, they did make clear just how tough the current environment has become for U.S. manufacturers especially those selling to farmers and builders. With net income down 26% to $1.289 billion for the quarter, compared to $1.734 billion in the same period a year ago, the company is contending with the sort of headwinds that no amount of corporate optimism can ignore. This is not a story about business as usual. It is about major cost jumps and jittery customers, both shaped by the policy and market storms of the past year. 

You do not have to squint to see what is weighing heaviest on Deere’s performance. The company’s own forecast for tariff expenses in fiscal 2025 has ballooned, with executives now expecting nearly $600 million to go straight out the door to cover duties imposed on key imports like steel and aluminum, plus higher rates on trade with Europe and India. For just the third quarter, tariffs alone added roughly $200 million in costs, a remarkable burden for any manufacturer trying to keep margins intact. Deere actually increased its estimate from the $500 million it predicted last quarter, a sign that these costs have not just stuck around; they are growing as Washington and other governments pile on new rounds of levies. 

The big picture is these tariffs are landing at the worst possible time. Farmers and construction customers remain wary thanks to soft crop prices, higher interest rates, and broader market volatility that is making buyers reevaluate every big-ticket purchase. Deere’s North American market, by far its largest, is feeling these trade dynamics most acutely, with sales of production and precision agriculture equipment dropping to $4.273 billion for the quarter, down from $5.099 billion the year before. 

John Deere’s response to these challenges illustrates how vulnerable even the most established names can be. Price increases have not been enough to offset the magnitude of the tariffs. In fact, prices have fallen in segments like construction and large agricultural equipment, which usually help lift overall results. Competitive pressures in North America’s earthmoving market and actions taken to address excess inventory have forced price drops that, while necessary for keeping inventory moving, also make it harder for Deere to dig out from rising costs. 

Meanwhile, the guidance from Deere’s executive suite is not what investors might have hoped for. The company edged its full-year net income forecast downward to between $4.75 billion and $5.25 billion, trimming the top end from previous forecasts, mostly because the cost pressures show few signs of fading. The company’s shares responded accordingly, falling about 7% after the announcement, as Wall Street digested the scale of the impact and what it might mean for future growth.

What is striking about Deere’s predicament is how little room manufacturers like it have to maneuver right now. Inventory management and cost controls can help blunt the effects, but when trade policy and shaky end markets combine, even the smartest tactical changes might not be enough. Farmers and builders are waiting to see where things settle out, and Deere’s performance serves as a bellwether for both sectors.

In conversations with analysts, company leaders have noted that lower crop prices continue to crimp farmers’ margins, making big expenditures on new equipment a much tougher sell. At the same time, uncertainty about new rounds of tariffs makes everyone cautious, and these jitters ripple through the economy as equipment makers lower prices to avoid stockpiling unsold machinery. 

For now, Deere is doing what it can, adjusting production, trying to keep inventories in line with actual retail demand, and keeping a close eye on every dollar spent. But the reality is simple: major cost increases from tariffs are here, and unless either trade policy or market sentiment makes a sharp turn, manufacturers like Deere will keep paying the price. 

In a year defined by tough choices and tighter margins, John Deere’s third-quarter results are a clear reminder that global policy shifts and changing customer sentiment do not just shape company forecasts; they shape the entire span of what is possible for U.S. industry.