U.S. tractor maker Deere & Co (NYSE: DE)’s CEO says the company is bracing for a negative financial impact from U.S. tariffs on steel imports and worries that retaliatory tariffs on American agricultural exports could follow.
The 25% tariffs, which U.S. President Donald Trump announced last month along with a 10% tariff on aluminum, could raise steel prices by 30% and may prompt the company to switch materials, Samuel Allen said at an event marking Deere's 60th year of production in Argentina.
"That would have an even longer negative impact on the steel industry," Allen said.
Beyond the hit from higher input prices, Allen said the tariffs could prompt some of the United States' major trade partners like Canada, Mexico and China to retaliate by putting tariffs on imports of U.S. agricultural products like corn or soybeans.
That reflected broader fears that Trump's tariffs could set off a global trade war. The tariffs were aimed at hitting Chinese over-production, but also hit key allies like the European Union, Canada and Mexico, though the latter two have been granted an exemption.
"The near-term impact financially we don't like, but the more important one is the longer-term potential impact taking U.S. farmers out of the world market for corn and soybeans," Allen said.
The United States is the world's number-two exporter of soybeans and top exporter of corn, according to the U.S. Department of Agriculture.
Shares in Deere lost $3.15, or 2%, to $154.90
