Key global farm machinery firm concerned about prices rises due to trade war

A leading global tractor manufacturer has raised concerns that potential US tariffs on steel could drive up production costs.

A new John Deere 8R tractor, and new combine harvester. PICTURE: ZOE PHILLIPS

A leading global tractor manufacturer has raised concerns that potential US tariffs on steel could drive up production costs.

“There is a fair amount of concern at the moment,” said John Deere Australia and New Zealand managing director Luke Chandler, speaking at The Australian’s Global Food Forum in Melbourne last week. His comments were in response to US President Donald Trump’s decision not to give Australia an exemption to 25 per cent tariffs on steel and aluminium.

However, rising machinery costs aren’t the only concern for the manufacturing and technology giant. John Deere is also worried about broader economic risks associated with likely tariff wars, including rising inflation, potential recessions and threats to international free trade - all of which could impact the competitiveness of Australia’s agricultural sector.

Mr Chandler noted that a key difference in a second Trump presidency, compared to the US-China trade war of the first. would be the broader price impact if tariffs were applied unilaterally across all countries, rather than targeting specific nations.

“You hear about the impact on steel prices,” he said, adding that manufacturer of tractors used steel.

“We are certainly watching that, and waiting too see what the impacts might be.

“From a macro point of view, the idea that we are putting more costs and more price into the economy is only going to drive some of these inflationary pressures.”

He noted that central banks worldwide have only just begun to ease the pressure from high inflation.

“If we go back into higher inflation, that’s going to raise broader concerns around recession(s).

“Global agriculture, farmers around the world, have benefited from the free trade environment.”

He said Australia’s export-focused agriculture sector needed “open and free market access” to thrive.

Mr Chandler also highlighted the rapid technological advancements changing modern farming.

“We now recruit more software engineers than mechanical engineers,” he said.

“We spend over $2 billion a year on investment in research and development, and a lot of that is on the software side, because nowadays farmers aren’t only looking for great products, they need a solution to bring value to their bottom line.”

He noted that spray and chemical costs were among the biggest expenses for farmers. Over the past decade, farmers have moved from applying chemical across entire paddocks to section-controlled spraying, and now to “green-on-brown technology” where sprayers detect and spray only weeds on fallowed ground. This has cut chemical use by up to 80 per cent. The next steep is “green-on-green” technology, which will enable sprayers to distinguish between weeds and crops like wheat.

When asked about the possibility of operating farm technology remotely - for example, from the Gold Coast - Mr Chandler said this could become a reality by 2050.