John Deere’s Third Quarter Is Slower Due To Tariff Pressure

The third quarter of 2025, which ran from April to July 27, painted a sobering picture for the massive manufacturer of construction and agricultural equipment, John Deere. 

Net sales decreased by 9% to roughly $12.0 billion, while net income fell by 26% to $1.29 billion from $1.73 billion the previous year. Sales have dropped 18% and net income has decreased 32% so far this year, which serves as a stark reminder of the difficult environment Deere is in.

Deere performed well apart from the challenging market

Deere’s leadership maintains their composure in the face of declining trends. In order to match production with the declining retail demand, CEO John May shares the importance of strict inventory control. 

This degree of responsiveness has contributed to stability throughout the dealer network, especially when it comes to handling high volumes of used machinery.

Did the construction and forestry segment get affected?

Deere’s forestry and construction division had significant difficulties. At about $3.06 billion, sales fell about 5%, and operating profit fell nearly 47% to $237 million. In light of the operating margin’s decline from 13.8 percent to just 7.7 percent, that represents a significant squeeze. The real culprit was pricing pressures rather than a lack of demand; aggressive dealer incentives and deeper discounts drove price realization into negative territory, which was somewhat mitigated by a favorable product mix.

What do you understand by the invisible toll of tariffs?

Challenges were made worse by the financial burden of international tariffs, particularly those imposed on steel, aluminum, and goods from countries like Europe and India. 

In just the third quarter, Deere reported production costs associated with tariffs of about $200 million, bringing the total impact for the year to date to roughly $300 million. 

Deere responded by increasing the $550 million pre-tax impact estimate for fiscal 2025 to almost $600 million.

What are the trends and prospects of other segments?

It was not just construction that was under pressure. Production and Precision Agriculture, Deere’s largest division, saw a 16 percent decline in sales and a halving of operating profit, to $580 million. 

With the support of advantageous cost and currency factors, Small Agriculture and Turf demonstrated greater resilience, reducing sales by just 1% while maintaining a healthy $485 million operating profit. 

Deere’s financial services division was the only bright spot, reporting a 34% increase in net income to $205 million.

Why did the market challenges become more vulnerable?

The lower end of Deere’s fiscal 2025 net income guidance remained at $4.75 billion, while the upper end was reduced from $5.5 billion to $5.25 billion due to the combined pressure of tariffs, cautious consumer behavior, and slow commodity prices. 

However, Deere still anticipates that industry headwinds will persist: sales of construction and forestry are expected to decline by 10–15%, production and precision agriculture by 15–20%, and small-scale agriculture and turf by about 10%. 

Don’t forget to subscribe to our YouTube channel for more equipment offers and insights into the industry.