Layoffs at John Deere reveal how Trump’s trade war is bleeding jobs

Many Americans are familiar with the “Waffle House Index” — the notion that the severity of a hurricane can be quickly assessed by whether the local Waffle House restaurant is closed. John Deere, the dominant manufacturer of agricultural heavy equipment, serves as a similar barometer of the economic health of America’s agricultural sector and the severity of economic storms created by shortsighted public policies.

When farmers feel secure, they buy from John Deere, and the company hums. When farmers feel anxious or unsure, they are hesitant to make large investments in equipment, and Deere feels the pinch first.

But unlike hurricanes, which are outside of human control and occur randomly at the convergence of various atmospheric conditions, economic storms can be created and manipulated by central figures seeking to consolidate power and control markets for their own benefit. Donald Trump appears to be engaged in exactly this type of central planning and economic control.

Trump’s tariff war has raised the costs of raw materials and other manufacturing inputs, clouded demand and frozen investment. The tariffs are effectively the largest tax increase on American manufacturers and consumers in modern U.S. history. Companies can’t afford to absorb significant long-term increases in the price of products without increasing prices. Producer prices jumped notably in July, and the Fed is now raising alarms about higher tariffs feeding inflation in several goods categories.

For Deere, the math is brutal. Farmers, already squeezed by weaker export prospects due to Trump’s trade war and labor disruptions created by Trump’s immigration crackdown, are delaying large purchases. Lower sales are, in turn, triggering more job cuts. Efforts by Deere to right to the ship by moving some manufacturing to Mexico to reduce costs were greeted by the Trump administration with attitudes more akin to a mob “protection” racket than a thoughtful pro-business, pro-free market economic policy. With options like Mexico off the table, all that remains for a company like Deere is more job cuts.

As a result, John Deere now plans to lay off more than 200 workers from its Midwest manufacturing plants. That’s in addition to more than 2,000 workers who have already lost their jobs in recent years. It appears more job cuts at Deere are coming, thanks to Trump.

Deere’s layoffs aren’t a mystery or a surprise; they were the forecast arriving right on time. As Deere executives have warned, trade-policy whiplash leads customers to delay big-ticket purchases – exactly what you’d expect when end markets are hostage to a simpleton’s politics rather than prices.

In September 2024, Deere tried to right the ship by shifting some of its heavy-machinery production to Mexico. The move was within the rules of the U.S.-Mexico-Canada Agreement that Trump negotiated and signed in 2020. But then-candidate Trump responded by threatening to hammer Deere with a 200% tariff if it followed through on the plan. That saber-rattle wasn’t a stray remark; it became a campaign talking point and a promise to engage in shakedown tactics that he would later make good on with other companies.

Take for example Nvidia and AMD, which recently agreed to an unprecedented 15% revenue-sharing arrangement on certain China sales as the price of receiving an export licenses. Lawmakers on the House Select Committee on Strategic Competition between the United States and the Chinese Communist Party have publicly condemned the deal, warning about a pay-to-play template for sensitive technology. Analysts likewise flagged the precedent: If market access hinges on routing a slice of sales to Washington, corporate strategy becomes a negotiation with politicians, not customers.

Defenders claim these arrangements are “one-offs,” necessary to manage geopolitical risk. But one-offs have a way of multiplying. On Friday, in a deal worth an estimated $10 billion, Trump announced that chipmaker Intel has agreed to give the U.S. government a $10 billion, or approximately 10%, stake in the company. In recent days, officials have even floated converting CHIPS Act grants into equity stakes, an idea that would make the federal government a major shareholder in Intel. Together, punitive tariffs, revenue skims, licensing deals and government stakes in private companies represent creeping state control over the economy — socialist policies wrapped in populist rhetoric.

The broader economy cannot outrun these conditions. Markets allocate capital by comparing risks and returns, and a government that reserves the right to rewrite those terms forces executives to trade engineering road maps for political road maps. Business plans built on productivity become business plans built on appeasement.

Trump insists his tariffs will revive factories and “end inflation.” The data argue otherwise: Wholesale prices are accelerating, and the Fed is warning that the tariff impulse has nudged inflation higher, complicating the path to rate cuts. Meanwhile, job growth has stalled and layoffs starting to arrive as America’s business try to navigate Trump’s gigantic tariff tax on them.

If the White House keeps escalating import taxes – 10% across the board here, 60% on China there, amounting to an average of 17% by most informed estimates – manufacturers and consumers should expect another round of price hikes. Trade wars are easy to start, expensive to win and impossible to insulate from the checkout line.

John Deere is an emblem, not an outlier. If we normalize government by tariff threat, revenue skim and equity grab, we shouldn’t be surprised when companies stop investing for growth and start investing for political favor, transforming the U.S. economy from a largely free-market model to centrally planned model like that of China and other authoritarian nations. Congress and the courts don’t need to adjudicate every industrial choice, but they must defend the simple proposition that rules, not reprisals, govern the economy. Deere’s customers, and the country’s credibility, depend on it.