“Everything’s going up in price, but also the cost of labor is going up,” says Taylor Brooks, a salesperson at Boyd’s local equipment dealer, James River Equipment in Tappahannock. For now, Boyd, the founder and president of the National Black Farmers Association, has decided to spend about $2,600 on parts and fix the combine himself. If he were to pay someone else to do it, he estimates that it would cost him about $8,000.
Read: American farmers are worried about Trump’s trade war
Some large equipment manufacturers, including John Deere and Caterpillar, announced almost immediately after the tariffs were implemented last summer that they would raise their prices to adjust for the higher price of steel and aluminum imports. It’s not just large manufacturers, though—small, locally based equipment manufacturers have also had to raise prices or look elsewhere for steel. In Montana, a horse-trailer manufacturer was forced to hike prices by about 20 percent last summer because of the tariffs. Bank of America Merrill Lynch downgraded John Deere’s stock in February, citing “a real risk to farm equipment demand” if the trade war continues.
Many farmers are precluded from buying new agricultural equipment because of a combination of higher prices and lower profits. But that puts them in a catch-22. Farmers replace their equipment only every five to seven years. Those who were going to replace it this year and now can’t afford to are forced to repair it instead. And because steel costs are up, so too are the costs of replacement parts.
“When commodities aren’t being sold, farmers don’t have cash,” says Vernon Schmidt, the executive vice president of the Farm Equipment Manufacturers Association. Schmidt works with specialized-equipment manufacturers, not tractor and combine producers. And, he said, the tariffs are affecting the manufacturers he works with in much the same way.
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Though there isn’t comprehensive data on how much higher farm-equipment costs are this season, both farmers and equipment dealers around the country told me that tariffs have been driving up prices significantly. That’s borne out by the Federal Reserve’s most recent “Beige Book,” an anecdotal survey of current national economic conditions in each of the Federal Reserve’s 12 districts. In the report, released earlier this month, farmers in the St. Louis district told their local Federal Reserve Bank that they’re seeing “low commodity prices and rising input costs strain farm incomes.” The Reserve also found that manufacturers are still concerned about “higher costs due to tariffs, and ongoing trade policy uncertainty.”
Though in many places the price of steel has steadied and even dropped, farmers are still seeing high prices on equipment that’s already been made. In anticipation of tariffs rising after the latest round of trade negotiations, in January, many manufacturers told the Reserve that they’re importing more materials now. That could mean prices will continue to be passed to consumers even if the trade war ends.