Relatively young fleet may allow farmers to delay equipment purchases amid tariffs

Global trade disruptions have caused significant challenges for Canadian agriculture. Businesses prefer stability, but constant tariff changes create confusion, making it difficult to plan. Additionally, there's widespread uncertainty about the full impact of tariffs. The CUSMA exemption from the 10% blanket tariffs, and the 90-day delay in U.S. reciprocal tariffs, have given some relief to the agriculture industry.

However, farm equipment manufacturers still face a lot of uncertainty. Outside the automotive sector, it's less known that steel and aluminum tariffs are already in effect. Also, following CUSMA rules can be complicated for parts and components used in manufacturing.

Canada has a strong, primarily niche agriculture equipment manufacturing sector, but most equipment is sourced from the U.S. The U.S.–China trade war has significantly increased the cost of components from China, creating uncertainty in the farm equipment industry. This raises concerns about the availability and cost of equipment needed this year and beyond.

Steel and Aluminum tariffs
The primary reason for implementing the U.S. steel and aluminum tariffs was to boost domestic U.S. steel production, aiming to increase capacity utilization to over 80% (Figure 1). These tariffs have significant consequences for the farm equipment industry. When tariffs raise costs on raw materials like steel and aluminum, the price of new equipment also rises. This impacts demand for farm equipment and has broader implications for farmers and manufacturers.

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