Deere & Company’s November 26, 2025 profit warning sent shockwaves through agricultural markets, signaling a sector-wide crisis that extends far beyond a single manufacturer. The company projected fiscal 2026 net income between $4.0 billion and $4.75 billion—substantially below the $5.19 billion analysts anticipated. Despite strong fourth-quarter results showing $12.39 billion in revenue and 11% growth, the grim outlook triggered a 6.3% stock decline. CEO John May attributed the pessimism to structural problems that will persist through 2026, acknowledging that even Deere’s operational excellence cannot overcome the agricultural sector’s fundamental collapse.
Market Contraction Signals Systemic Failure
Deere expects the North American large agricultural equipment market to contract 15–20% in fiscal 2026, with the company’s own sales declining 5–10%. Industry data confirms the severity: U.S. tractor sales fell 9.2% through October 2025, while four-wheel-drive tractors plummeted 56.3% and combines dropped 38.4%. This widespread deterioration indicates a systemic crisis affecting the entire market rather than isolated company weakness.
The Tariff Multiplier Effect
Tariffs have emerged as a primary structural drag on agricultural profitability. Deere cited “ongoing margin pressures from tariffs” as a key factor in its pessimistic outlook, with the company facing approximately $1.2 billion in tariff expenses in fiscal 2026—double the $600 million paid in fiscal 2025. U.S. tariffs on steel, aluminum, and components drive up equipment manufacturing costs, while Chinese retaliatory tariffs devastate export markets. Farmers now confront a triple squeeze: rising equipment prices, higher input costs, and collapsed export revenue.
The soybean export collapse exemplifies this dynamic. China purchased $12.7 billion of U.S. soybeans in 2024, but after imposing 125% retaliatory tariffs on U.S. agricultural products in 2025, Chinese buyers effectively ceased purchasing. U.S. soybean exports to China fell 51% in 2025 versus 2024. When export income vanishes, farmers cannot afford new equipment, directly explaining why tractor sales are imploding.
Farmer Confidence Deteriorates
Agricultural regions show visible anxiety. Brian Warpup, an Indiana farmer with 3,900 acres, reflected the broader loss of confidence in September 2025: “Things have stalled all summer long. With harvest here, patience may run thin.” Weak commodity prices and rising tariff costs push farmers to delay machinery purchases and postpone upgrades. Equipment dealers and Deere face a devastating demand freeze—farmers don’t need less equipment; they simply cannot afford it at this time.
Zack Levendsky of the Kansas Farmers Union noted in late November 2025 that “fertilizer, seed, chemical, equipment, and fuel costs hit record highs, with tariffs going up even more.” Vegetable farmer Mary Carroll Dodd reported in November 2025: “We raised vegetable prices like collards and kale because tariffs drove up our costs.” System-wide cost inflation squeezes profit margins everywhere.
Trade Uncertainty Cascades Through Supply Chains
Tariff uncertainty itself damages farm investment decisions. Josh Main told Fortune in late November 2025: “We worry about trade volatility. It’s hard to plan.” Farmers need multi-year visibility for equipment purchases, land investments, and workforce decisions. Unpredictable tariff shifts force farmers to delay spending, which cascades through the economy: lower equipment demand leads Deere to cut production, suppliers tighten inventory, and rural manufacturers lay off workers.
Thousands of rural small businesses depend on Deere’s success. Equipment dealers—independent firms that sell, service, and finance Deere equipment—face revenue collapse. When farmers don’t buy tractors, dealers lose sales, service work, and finance income. Many farm equipment dealers operate on thin margins and carry heavy inventory. Weak demand forces discounts, inventory buildup, and layoffs. Parts suppliers face identical pressure.
Uncertain Path Forward
Deere CEO John May claimed “2026 will mark the bottom of the large ag cycle,” but independent agricultural economists express skepticism. Some worry weak commodity prices, tariff uncertainty, and high farm debt create a downward spiral rather than a cyclical bottom. If equipment demand contracts by 15–20% and remains weak for years, the sector will undergo structural shrinkage. Prolonged weak demand combined with high input costs could accelerate farm consolidation, pushing marginal operators out and concentrating production among large, well-funded farms. Policy decisions regarding tariffs and farm subsidies will significantly shape outcomes. Current conditions remain unsustainable indefinitely.
Sources:
Investopedia, November 26, 2025
TTNews, November 25, 2025
Reuters, November 26, 2025
CNN, September 20, 2025
TIKR Blog, November 26, 2025
Fortune, November 21, 2025