John Deere, the legendary maker of tractors and farm equipment, is now facing one of its biggest money problems in decades. In 2025, new U.S. tariffs on steel and aluminum caused the cost of raw materials to shoot up, forcing the company to rethink its financial future.

Executives warn that the situation could shake rural economies across America if it continues. Deere has been forced to disclose in recent filings that pressure is building at every level of the company as trade disputes get worse.

What’s at Stake for Workers

For thousands of John Deere employees, the tariff crisis isn’t something distant, it’s personal. During the summer of 2025, the company issued warnings about large-scale layoffs. By September, those warnings became reality as hundreds of employees in Iowa and Illinois were told their jobs were gone.

Labor unions stressed that these layoffs weren’t a temporary dip in orders, but part of a deeper, structural shift tied to changing trade policy. Workers described the news as a shock, facing uncertainty about bills, healthcare, and how to find jobs in communities built around a single major employer.

How Trade Wars Sparked the Crisis

The trouble for John Deere didn’t appear out of nowhere. It traces back to trade policy decisions in Washington. In June 2025, the Trump administration pushed through new tariffs that heavily targeted steel and aluminum, two of the most important materials for farm equipment manufacturing. This caused Deere’s input costs to skyrocket by nearly 50%.

Industry experts estimate these tariffs added around $600 million in expenses for Deere in only a few months. That kind of cost increase was impossible to absorb for an industry already struggling with ups and downs in commodity prices. As one New York Times analysis put it, “Tariffs that were supposed to defend U.S. workers instead exposed them to a new wave of instability.”

Farmers Caught in the Middle

The pain didn’t stop at Deere’s factories. Farmers across the country quickly felt the squeeze. Rising steel and aluminum costs trickled down to equipment buyers, making tractors and harvesters more expensive. For many small farmers in the Midwest, buying new machinery or upgrading existing fleets became impossible.

Demand for John Deere equipment plummeted, and economists reported double-digit declines in sales, particularly hurting family-owned farms. One Iowa corn farmer said, “We’re caught in the crossfire—paying more, earning less, and unable to invest for our future.” With fewer orders coming in, Deere slowed production even more, creating a chain reaction that hit both agriculture and manufacturing at the same time.

The Wave of Layoffs

By late August, John Deere officially announced the layoffs that had been feared all summer. In regulatory filings, the company confirmed 238 employees would lose their jobs across three major plants in August and September. Management directly linked the cuts to shrinking orders and the burden of an added $600 million in costs tied to tariffs.

Executives stressed that layoffs were not optional, but necessary for the company to remain stable during a financial storm. One affected worker said, “We built our entire lives around these jobs, and now the ground has shifted under us.”

Shockwaves in Waterloo

The layoffs hit Waterloo, Iowa, especially hard. Seventy-one workers at the plant received notice that their employment would end on September 19, 2025. In a town where Deere is one of the largest employers, the ripple effects were immediate. Families wondered how to cover expenses, find new jobs, or keep health insurance.

Waterloo has lived through ups and downs with Deere before, but locals say this time feels different because the job losses are tied to broader policy shifts rather than business cycles. One city council member remarked, “It’s not just Waterloo losing jobs—it’s American manufacturing losing its footing in trade battles we don’t control.”

Tough Cuts in Illinois

The situation was no better in Illinois. John Deere’s East Moline and Moline plants, long known as steady employers for generations of families, were hit with job cuts in August and September 2025. The East Moline factory lost 115 jobs, while another 52 were cut from the nearby Moline facility. These weren’t just numbers, many of the workers had been with the company for decades, building careers and rooting their families in towns that relied on steady factory wages.

Parts suppliers, local restaurants, and service businesses were set to suffer as laid-off employees tightened their spending. While John Deere promised to ease the disruption and avoid more cuts, executives admitted that additional layoffs could not be ruled out if tariffs remained in place.

Ripple Effects Beyond Deere

John Deere may be the biggest headline, but the pain has rippled across the entire farm machinery industry. Competitors like AGCO and CNH Industrial also reported slower sales and cut back on production during the third quarter of 2025. The problem was the same everywhere, rising material costs squeezing companies and falling demand keeping farmers from upgrading equipment.

Many dealers told customers they offered special promotions to keep sales moving, but farmers hesitated. The slowdown wasn’t limited to equipment manufacturers, it stretched across rural economies. One agricultural economist observed, “The pullback in machinery sales is like a warning light for the broader rural economy—when farmers stop buying, the slowdown spreads everywhere.”

Farmers Forced to Hold Back

The tariff crisis has left farmers feeling trapped. On one hand, their input costs are climbing due to more expensive steel, fertilizer, and fuel. On the other hand, they have less confidence in crop prices and future trade conditions. That combination has made farmers far more cautious about spending, especially on big-ticket items like new tractors, harvesters, or planters.

Surveys reported about one in five farmers postponed or cancelled plans to purchase equipment in 2025. Despite rising maintenance costs, many growers are simply holding on to older tractors because new purchases don’t feel safe. As one Illinois farmer said, “We’d love to invest for the next generation, but right now we’re just focused on making it through the season.”

Deere’s Corporate Admission

John Deere executives didn’t try to sugarcoat the problem. During their third-quarter earnings call, company leaders confirmed that the $600 million tariff expense directly influenced layoffs. CEO John May explained, “We continue proactively managing inventory and costs, but policy changes outside our control significantly altered our operating environment.” In plain terms, Deere admitted that these job cuts weren’t simply the result of weak management decisions, external government policies drove them.

This framing mattered to investors and the public because it put responsibility beyond Deere. The company made clear that while they would work hard to adapt, they couldn’t fully shield their workers from policy-driven cost surges.

Workers React to Job Losses

For many Deere employees, the layoffs came like a thunderbolt. Workers in Iowa and Illinois said they got little warning before being told their jobs were over. Families scrambled to figure out how to stay afloat, some weighing whether to dip into savings, others even considering leaving the region in search of work.

Unions moved quickly to fight for better severance pay and to help workers find new opportunities. They also pressed government officials to provide more retraining programs so employees could move into other industries. One longtime Deere employee summarized the mood: “We’re proud of what we built and want to come back—if there’s anything left to return to.”

Deere’s Management Shifts Strategy

Faced with mounting losses, John Deere turned to quick fixes to limit the damage. Executives cut back production schedules, renegotiated contracts with suppliers, and tried to streamline operations. Management defended these moves as “swift, proactive steps needed to preserve long-term stability.” Industry watchers, however, worried that additional measures could include heavier reliance on automation, merging facilities, or even temporary factory shutdowns if tariffs continued for another year.

Local Government Steps In

Local leaders in affected towns refused to stay quiet. In Waterloo, city council members organized emergency forums to help displaced workers and families gain access to unemployment benefits, healthcare coverage, and retraining opportunities. Iowa state officials partnered with local nonprofits to design job-matching programs for those left without work.

Meanwhile, mayors in Illinois and Iowa publicly pushed federal leaders to rethink the tariff strategy or roll out targeted financial relief for towns tied to manufacturing jobs. While these efforts showed community solidarity, officials admitted that city and state budgets couldn’t fully make up for the scale of losses.

National Spotlight and Debate

By late summer, the Deere layoffs had become national news. Lawmakers in Washington clashed publicly over the costs versus the benefits of tariffs. Congressional hearings brought testimony from laid-off workers, John Deere executives, and economists.

The White House defended the strategy, saying tariffs were designed to “level the playing field.” But administration officials also admitted there were “unintended consequences” hitting manufacturers and rural communities across the country.

Can Deere Recover?

Even as they announced layoffs, John Deere executives struck an optimistic tone about the future. The company pointed to investments in automation, efforts to use more domestic supply chains, and attempts to expand into new international markets less affected by tariffs. However, experts noted that real recovery would depend on Deere’s internal efforts and wider forces in global trade and agriculture.

Rural economies, in particular, can only recover if workers find new jobs and farmers regain confidence in investing in equipment again. Economists say outcomes hinge on complicated factors such as geopolitical negotiations, climate conditions, and consumer demand, many of which are beyond Deere’s control.

Investigations and Legal Action Begin

The layoffs didn’t just spark public anger—they triggered legal and political responses. The Senate Agriculture Committee opened hearings on the impact of tariffs on machinery makers like John Deere, gathering testimony from industry leaders and worker representatives. At the same time, lawyers representing displaced employees filed lawsuits claiming violations of the WARN Act, arguing that workers were not given proper advance notice before the layoffs.

In Congress, new bills were introduced pushing for temporary financial relief for companies hit hardest by tariffs or even rolling back some of the tariff rules altogether.

Other Industries Struggle Too

John Deere’s challenges aren’t isolated. Across the U.S., construction equipment, autos, and even tech hardware companies have reported similar disruptions from rising material costs and supply chain snags. Caterpillar warned investors that the same steel tariffs were driving up production costs.

Ford and GE issued statements highlighting delays and losses tied to global supply disruptions. Economic historians even compared 2025 to earlier trade wars, noting how one government decision can trigger domino effects in many unrelated industries. One Wall Street Journal piece noted, “Tariffs may target specific products, but their impact echoes across entire ecosystems of manufacturing.”

The Public Debate Heats Up

On social media and in the press, voices clashed over who or what was truly to blame. Some argued that the layoffs were inevitable due to automation and global competition, while others insisted that tariffs were the trigger. Influential voices praised tariffs as protecting jobs in the long run and condemned them as reckless.

Economic experts tried to cut through the noise by pointing out real data, explaining how steel and aluminum costs had jumped, which forced manufacturers’ hands. “It’s important to understand this as a long-term structural problem, not just a short-term headline,” one analyst told Newsweek.

Lessons from the Past

The 2018–2019 trade wars, when similar tariffs had been introduced, also led to rolling layoffs and slowed production. History showed that while industries recovered somewhat when relief measures and policy changes kicked in, many workers never regained their old jobs. Instead, employment levels remained permanently lower than before tariffs.

Economists warn that today’s policies risk repeating that pattern unless new approaches are found. “We’ve seen this movie before,” wrote analysts in The Economist. “Without targeted relief and smarter trade agreements, tariffs will leave scars that last long after the dust settles.”

What We Can Learn

What begins as policy in Washington can reshape lives in small-town Iowa or Illinois. When prices rise and production slows, jobs vanish, businesses struggle, and families feel the weight. John Deere’s situation shows how trade tensions deeply across industries and communities. If tariffs remain in place, company officials warn that this could only be the beginning of more job cuts across manufacturing.

For policymakers and business leaders, the path forward will require fact-based decisions, not speculation or political slogans. As Reuters said, “Decisions made at the highest levels eventually show up in the most personal ways—for families, communities, and the workers at the factory floor.”