Deere & Co. is signalling a rough year ahead after warning that new tariffs and shrinking margins on its largest farm equipment will push full-year profits below expectations. The company said that fiscal 2026 pre-tax headwinds from tariffs could more than double the burden seen this year.

Although revenue climbed by about 11 per cent in the most recent quarter, buoyed by strong demand in some segments, net income dropped compared with a year ago. Deere forecast it will post between US$4.00 billion and US$4.75 billion in net income for 2026, a significant shortfall relative to the roughly US$5.33 billion analysts had projected.

The challenge stems mainly from tariffs that inflate material costs and compress margins on large tractors and combines — a segment of Deere’s business that has also seen weaker demand as farmers confront lower commodity prices and higher production costs. Many farmers are responding by delaying major equipment purchases or opting for rentals or used machines rather than new gear.

To soften the blow, Deere plans to lean more heavily on cost-cutting measures and expects growth in its forestry and small-agriculture divisions to help offset weakness in large equipment. Company leadership described fiscal 2026 as likely the low-point of the current downturn for the large-agriculture equipment cycle.

Still, the revised forecast disappointed investors, and shares fell on the announcement. The situation underscores how trade policy shifts and volatility in commodity markets continue to ripple through the agricultural-equipment sector — a sector tied closely to the financial health of farmers and broader global trade conditions.

The outlook suggests that recovery may not come swiftly. Unless tariffs ease or demand rebounds significantly, large-scale farmers might continue to defer upgrades or turn to rentals and used equipment, prolonging pressure on manufacturers such as Deere.