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Equipment makers facing rising costs amid ongoing uncertainty

A global equipment manufacturer says tariff disputes are continuing to drive up farm equipment costs.

Eric Raby, senior vice president for Region Americas with CLAAS says the price of steel and iron has moved higher. “A lot of components that we use to make the machines are going to get tariffed or taxed or have some sort of import duty imposed on them. Then, the finished machine will have on top of that, perhaps, another tariff.”

For example, he says, “Harvesting machines up until about a few months ago was at a 25 percent tariff. We did get some of that reduced by working with Washington to get that down to 15 (percent).”

Raby says margins for manufacturers are also tight from a rise in production costs. “We’ve got a tendency to stack a lot of different tariffs and taxes and things like that which are raising prices. We are not able to shift nor do we want to shift a 100 percent of that price to the machine.”

He tells Brownfield while there is economic uncertainty, he says some farmers are optimistic about demand short and long term. “Both of those are trending slightly upwards so that is good. However, in the meantime, we’ve seen the Fed raise interest rates by 25 basis points, which is going to take some time to get to the market. It won’t have an immediate impact, but it’s a mental roadblock to profitability for farmers. The other is diesel prices.”

Raby says he’ll be closely watching how input costs will influence farmers’ purchasing decisions between now and the end of the year.

Eric Raby: