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The U.S. farm machinery industry is facing mounting challenges, including declining farm income, high input costs, and an oversupply of used equipment. Now, the threat of new trade disputes could further destabilize the market. Industry experts fear that tariffs on Canada, Mexico, and China will disrupt supply chains, drive up costs, and weaken the global competitiveness of U.S. agriculture.

A Market on Edge
President Donald Trump has threatened 25% import tariffs on Canada and Mexico, while a 10% tariff on Chinese goods and a 25% tariff on steel and aluminum are already in place. In response, China has imposed a 10% tariff on U.S. agricultural equipment, further pressuring American manufacturers and farmers.

“It’s a perfect storm,” says Eric Wareham, senior vice president of government affairs at the North American Equipment Dealers Association. With shifting trade relationships, the long-term concern is that key markets will seek alternative suppliers, potentially leaving U.S. farmers and manufacturers with fewer buyers for their products.

Rising Costs and Market Shifts
Import tariffs could lead to increased costs for farm equipment, impacting both new and used machinery markets. Manufacturers will either absorb the cost or pass it on to dealers and, ultimately, farmers. Wareham warns, “Dealers are buyers, too. So yes, they will have to pass on the cost. There’s no absorbing this.”

Meanwhile, the used-equipment market has been heating up due to inflation, but auction values for compact and utility tractors have been falling. Sales of new farm machinery are also dropping, with U.S. tractor sales down 15.8% and combine sales plunging nearly 79% compared to early 2024.

Implications for Ag Tech and Farm Income
The tariffs could hit the agricultural technology sector particularly hard. Many essential tech components—such as sensors and cameras—are sourced from China, making autonomous farm equipment and precision ag tools more expensive. Sabanto CEO Craig Rupp notes, “I think it’s going to affect ag tech more so than the ‘big iron’ industry.”

With Canada and Mexico accounting for significant portions of U.S. agricultural trade, further disputes could push these countries to seek alternative suppliers. If that happens, U.S. farmers may once again rely on government aid to offset their losses. However, Wareham cautions that such payments often come too late, leaving farmers in financial limbo.

As the industry braces for uncertainty, many are taking a “wait-and-see” approach, holding off on major equipment purchases until the full impact of the trade disputes becomes clear.

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