Trump's threat of 200% tariffs could destabilize the agricultural market

A plan by President Donald Trump to impose 200% tariffs on the agricultural equipment manufacturer John Deere would have far-reaching impacts on the supply chain and ultimately on consumers' wallets, according to a Mexico trade expert. Tariffs would raise the costs of goods and decrease demand, which would ultimately hit consumers hard, explained Jorge Canavati, a senior associate at the logistics provider J. Canavati & Co., in an interview with FreightWaves. The Republican presidential candidate Trump announced on Monday that he would impose 200% tariffs on imports of John Deere tractors and equipment into the U.S. if the company were to move jobs from a plant in Iowa to Mexico. Trump made these plans public during an agricultural event in Smithton, Pennsylvania. The global company John Deere, headquartered in Moline, Illinois, operates more than 100 factories in 30 countries worldwide. The manufacturer of agricultural and construction machinery runs four plants in Mexico, including in the cities of Monterrey, Ramos Arizpe, Saltillo, and Torreon. John Deere announced in June that it was shifting the production of some industrial agricultural equipment from Waterloo, Iowa, to Ramos Arizpe, due to labor market costs. The decision to consolidate production was aimed at meeting the demands of the tight labor market while simultaneously creating space for new products in Waterloo. Since the announcement in June, 950 jobs have been cut in Waterloo. Canavati warned that tariffs often lead to countermeasures. An example of this is China’s reaction to the initial tariffs imposed by the Trump administration. After Trump imposed tariffs on Chinese goods in 2017 and 2018, China countered with tariffs on U.S. agricultural exports, causing significant losses for U.S. farmers. Trump also spoke about imposing tariffs of more than 60% on goods made in China if he wins the election in November.