Shares of Deere & Co. (DE) fell 2% in extended trading after former U.S. President Donald Trump threatened to impose a 200% tariff on the farm equipment maker if it moves production to Mexico.
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Trump, who is running for re-election as the Republican presidential candidate, said he would impose the hefty tariff on Deere & Co. if the company known for its distinctive green and yellow tractors proceeds with a plan to move part of its manufacturing to Mexico where labor costs are cheaper than in the U.S.
“I’m just notifying John Deere right now, if you do that, we’re putting a 200% tariff on everything that you want to sell into the United States,” Trump said at a campaign event. DE stock slumped 2% immediately after the comments were made. Year to date, the share price has risen 3%.
Low-Cost Production Center
Trump was referring to a plan by Deere & Co., announced in June of this year, to shift 610 production staff and some of its manufacturing facilities from Illinois and Iowa to low-cost centers in Mexico. Specifically, Deere said that it intends to layoff 280 workers at an Illinois plant and 230 employees at a factory located in Iowa.
The move to Mexico comes after Deere & Co., which sells farm equipment and lawnmowers under the “John Deere” brand, lowered its forward guidance for this year, citing falling crop prices. The U.S. Department of Agriculture (USDA) has forecast that revenue from crops this year will decline 10% from 2023 levels, led by a downturn in prices for staples such as corn and soybeans. Farm incomes in America are expected to total $140 billion this year, down 25% from levels seen in 2022.
Is DE Stock a Buy?
The stock of Deere & Co. has a consensus rating of Moderate Buy among 15 Wall Street analysts. That’s based on eight Buy and seven Hold ratings issued in the last three months. There are no Sell ratings on the stock. The average price target on DE stock of $409.79 implies 0.21% upside from current levels.
