Deere tariff relief and refund help offset trade shock, but net tariff costs remain high

Deere & Company said it has recovered $272 million in tariff refunds tied to duties the Supreme Court invalidated earlier this year, a financial tailwind that comes as the Trump administration also adjusted tariff rates for certain categories of farm and mobile industrial equipment. The refund does not eliminate Deere’s trade exposure, executives said, because the company is still carrying roughly $900 million in expected net tariff costs for the fiscal year ending Nov. 1.

The refund is tied to tariffs imposed under the International Emergency Economic Powers Act (IEEPA). In its most recent quarterly report, Deere said the Supreme Court issued its decision on Feb. 20, 2026 invalidating those IEEPA tariffs. Deere also said U.S. Customs and Border Protection began processing IEEPA tariff refund claims on April 20, 2026, and that it filed a claim for $272 million that CBP accepted. The company recorded the recovery as probable and reasonably estimable, reducing cost of sales.

On top of the refund, the administration issued a June 1, 2026 proclamation adjusting Section 232 tariffs for metals-related imports. The White House said the changes lower tariffs on agricultural equipment, including combines and harvesters, from 25% to 15%. It also expanded the 15% tariff category to include mobile industrial equipment such as bulldozers and forklifts when imported from trade-deal countries, and created a potential 10% duty rate for capital equipment that includes at least 85% U.S. steel or aluminum by weight. The White House said the adjustments are temporary, lasting until Dec. 31, 2027.

For Deere, a company whose equipment is exposed to both the pricing of inputs and the landed cost of components and finished products, the tariff shift matters because it can change the relative cost of sourcing and manufacturing across the supply chain. Even when a tariff cut reduces the tax rate on certain imports, the practical impact depends on which parts Deere buys, where those parts are built, and whether Deere can reconfigure sourcing to capture the lower duties. In its filing, Deere said incremental import tariffs have adversely affected the cost of its products and components since 2025 and continued to do so in 2026, while adding that it is pursuing product exemptions and cost reduction opportunities.

Executives discussed both the refund and the remaining exposure during a May 21 earnings call referenced by Supply Chain Dive. In that reporting, Deere’s director of investor relations, Josh Beal, said the company still expects about $900 million in net tariff costs for the fiscal year after accounting for the tariff recovery, even as the administration collects Section 122 duties and adjusts its Section 232 levies.

The combination of the tariff refund and the new tariff regime could influence Deere’s competitive standing, particularly in agriculture and in equipment used in construction and forestry. If tariff changes reduce the landed cost of certain imported machines or parts, that can ease pricing pressure and improve availability, helping dealers and customers compare Deere offerings to competing equipment from other manufacturers. But Deere’s own disclosures suggest the company views trade policy as a moving target, not a settled tailwind.

Deere did not, in the materials reviewed here, provide a breakdown of how much margin improvement it expects from the June 1 Section 232 tariff adjustments, nor did it quantify which specific equipment categories or supplier components benefit most. In its quarterly filing, Deere emphasized that trade policies continue to evolve and that it cannot reasonably foresee when underlying conditions may subside, an acknowledgement that timing and scope of any tariff relief could change again.

What to watch next is whether Deere updates its net tariff cost outlook as the year progresses, particularly if the administration modifies additional tariff categories or eligibility rules under Section 232. Investors will likely also look for whether Deere can convert the refund and any incremental tariff reductions into sustained cost-of-sales benefits, rather than just offsetting prior charges.