Is the Farm Equipment Sector Consolidating?
- Michelle Klieger
- May 1
- 4 min read

Farm Equipment Microcosm Gives Insight Into Global Trade
By the time this article gets posted to my website it’s fairly likely that tariff percentages will have shifted again. No sector of business seems to be catching any breaks as trade landscapes continue to shift. Currently, tariffs on Chinese goods are climbing while a majority of other trade relationships are experiencing a bit of a reprieve. But, as we’ve seen lately, a lot can change in a week’s time. It isn't any wonder that large companies with a foot on multiple continents have pressed the pause button on business rather than make crucial decisions in uncertain dynamics.
Farm equipment is no different. The microcosm of the equipment industry makes for an interesting lens when it comes to viewing our very interdependent global trade relationships. Things are much more nuanced than they sometimes seem and straightforward changes can have large scale effects.
CNH, the parent company to well known farm equipment brands like New Holland and Case IH, was the first agricultural business to pause shipments and fully assess tariff impacts. AGCO has followed suit, opting not to make major moves until trade scenarios are better understood. Like so many other industries, getting tractors where they are needed isn’t as simple as building machines in the United States and selling them to India or China. Often equipment is built of components sourced from multiple countries. And, the type of farm equipment needed in China or preferred in Europe isn’t always what American farmers are looking to buy. In light of tariffs, where machines are built and assembled in relation to where they are purchased has become even more complex.
What are the Effects of Tariffs on Consumer Behavior?
Markets are uncertain at the moment and this is perhaps felt most strongly in agriculture. A high percentage of agricultural economists say that this sector of the U.S. economy is in recession. Input costs outpacing income gains has been the trend since 2022 and going into this year's growing season the ratio isn’t expected to experience a meaningful shift. The prolonged decline could be a sign of recession.
Consumers appear to be cautions as they too wait for trade dynamics to settle. In the world of farming where ebbs and flows are fairly normal it's common for farmers to hold off on big purchases, like equipment, during lean years. Last year there was a surplus of farm equipment, new machines were being auctioned rather than sold off the lot just so that dealerships could avoid paying storage fees on unsold equipment. Demand was low and prices dropped. This year, supplies are dialed back to match the dwindling demand, but with tariffs available equipment will likely be more expensive.
It’s a tough situation for farmers who are unsure of who will be purchasing their crops come harvest time, are experiencing labor shortages and still paying high prices for seeds, fertilizer and fuel. Last year CNH reduced production by 34% in an attempt to lower inventories by $700 million. The equipment company laid off 400 employees in North Dakota and Minnesota as a result. The company, which has 40 facilities total and operates all around the world is projecting a 13%-18% fall in sales in 2025 due to declining farm incomes and tariff expenses.
Navigating Present Trade Dynamics While Planning for Future Dynamics
Should farm equipment companies like CNH or AGCO relocate operations? Should they forego production of one type of equipment for another? These questions are not unique to agriculture and farm equipment industries. Across the globe companies are weighing current trade dynamics against future market potential; an everyday business activity suddenly rattled by tariff wars.
Despite reduced production at the moment, farm equipment is expected to grow into a $52.79 billion industry by the year 2032. In 2024 farm incomes fell by 25% in the United States and led to a 20% decline in equipment sales. Sales fell in Europe by 11% and in India by 8.7% with continued decline expected again this year. It’s hard to imagine that farm equipment will boom again soon and yet growth projections haven’t shifted.
Tariff wars and recessed ag economies are anticipated to be temporary; lasting no longer than 2-3 before rebounding. When they rebound we could see a spike in demand from India who is poised to be an emerging agricultural market as well as China. Europe is expected to see an increase in demand for electronic farm equipment in support of climate smart initiatives. Both China and India will likely favor tractor mounted equipment that can be used on inlines and raised beds. And North American farmers are trending towards precision sewing technology.
Again, the microcosm of farm equipment is a glimpse into global trade complexities. How can companies like CNH who exist in multiple countries and support a variety of markets maximize opportunities now while also preparing for the future?
No Big Moves Expected for Farm Equipment
Farmers are expected to absorb additional farm equipment costs from tariffs. As it sits that could amount to upwards of $400 million when the cost of imported parts goes up. Efforts to reduce the impact for consumers could include dual sourcing or relocating production facilities. But, will efforts to minimize price increases now create future problems?
When it comes to farm equipment production relocating any facilities would take between 12 -18 months. If trade agreements stand and tariffs are still in place for years to come it could benefit a company to move manufacturing and assembling “back home” or to a location that cuts back on tariff expenses. However, a lot can change in a year and a half and if tariffs wane businesses that relocate could regret moving farther away from emerging markets.
To consolidate or diversify is the question. While some industries will benefit by scaling down and moving operations, others will opt to diversify or produce similar products in more locations for the sake of flexibility in changing dynamics. CNH paused equipment shipments this month, but they also acquired robotics technology that is expected to combat labor shortages here in the United States and abroad.
This could be an example of a diversified company who is able to successfully navigate fast paced changes in trade and consumer demand because they can contract production in one area while expanding production in another. They have more options when it comes to what they can build and where they can build it. In one scenario, tariffs kick off a season of consolidation and specialization; in another the tariff war kicks off an era of diversification.
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