Deere: The Tariff-Proof Stock You Need to Know About!

Listen up, folks! We're diving into the world of Deere & Co., the tractor giant that's making waves in the agricultural and construction equipment industry. With tariffs looming large and the market in a state of flux, you might be wondering: Could Deere stock be a defensive play against tariffs? Let's break it down!

First things first, Deere has been navigating a challenging landscape. The company reported a 35% slump in Q1 sales to $6.8 billion, driven by sluggish global demand for agriculture and earthmoving equipment. Profits were slashed to $869 million, but here's the kicker: Deere is leveraging its scale to become a net exporter of agriculture and turf equipment from the United States. More than 75% of Deere’s domestic sales account for products assembled at U.S. manufacturing facilities. This means that a significant portion of Deere's production is not directly impacted by tariffs on imported goods.



Now, let's talk about component sourcing. About 10% of Deere’s U.S. manufacturing cost of goods sold come from Mexico, with less than 2% coming from China and approximately 1% from Canada. This diversification in sourcing helps mitigate the impact of tariffs from any single country. As Joshua Jepsen, SVP and CFO of Deere, stated, "The tariffs with China will have an 'immaterial' impact on the business." This is a big deal, folks! It means Deere is well-positioned to weather the storm of retaliatory tariffs.

But wait, there's more! Deere has been focusing on supplier resiliency and cost management to better respond to external disruptions. This strategic approach positions the company well to navigate the current environment of dynamic trade policies and potential retaliatory tariffs. As Jepsen mentioned, "which position us well to navigate the current environment."

Now, let's talk about inventory management. Deere has been working on optimizing inventory levels in response to uncertain market conditions. For example, in North America, large field equipment inventories were down 25% in 2024 over the previous year, with 220-plus horsepower tractors down twice as much as the industry. This proactive inventory management helps the company to be more agile in responding to changes in trade policies and market demands.



So, what does all this mean for Deere stock? Well, folks, Deere's status as a net exporter, combined with its strategic sourcing, diversified export destinations, focus on supplier resiliency, and proactive inventory management, could help shield the company from the adverse effects of retaliatory tariffs from major trading partners. This makes Deere stock a potential defensive play against tariffs.

But don't just take my word for it. Deere's performance in the first quarter highlights its continued focus on optimizing inventory. As CEO John May stated, "Deere’s performance in the first quarter highlights our continued focus on optimizing inventory. We’re seeing compelling evidence that our efforts are positioning the company to successfully navigate the current environment." This focus on inventory optimization and cost management has helped Deere maintain its financial performance despite the challenges posed by tariffs.

So, are you ready to make a move? Deere stock could be the defensive play you've been looking for in this tariff-ridden market. Don't miss out on this opportunity to invest in a company that's positioning itself to thrive in uncertain times. BUY NOW!