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Reductions in equipment tariffs won’t likely translate to farmer cost savings

An ag economist says tariff reductions on ag equipment aren’t expected to provide significant price relief for U.S. farmers.

David Widmar with Agricultural Economic Insights tells Brownfield,” We haven’t seen in the data that prices of equipment, prices for parts across all categories will come down and provide relief for producers. It’s just starting to increase at a little bit more consistently or at a little bit more moderate rate.”

The White House announced Monday it would reduce the duties on ag and construction equipment from 25 percent to 15 percent starting on June 8th.

Widmar says it could provide temporary cost reductions, but several other factors are still at play.

“Is that tax passed along to individuals in the US or are they paid by those manufacturers who are shipping those goods,” he says. “Is it in the form of lower profitability or lower margins? Those manufactures often have a higher cost structure.”

Widmar says without broader shifts in price structure and inflation, farmers won’t see lasting cost savings.

The Trump administration says the tariff reduction will remain in effect until 2027.

AUDIO: David Widmar, AEI