URBANA, Ill. (RFD NEWS) — U.S. farm machinery demand continues weakening as lower crop incomes, high borrowing costs, and tariff pressures combine to slow equipment purchases and reshape manufacturer strategies, according to analysis by Gerald Mashange of the University of Illinois published by farmdoc daily. The downturn reflects tightening farm margins that are directly influencing capital spending decisions across agriculture.
Mashange reports equipment sales have remained in contraction territory for more than two years. The Creighton University Farm Equipment Sales Index has stayed below growth-neutral levels since October 2023, falling to 16.7 in February 2026.
National data show tractor sales declined to 195,857 units in 2025, down nearly 10 percent from the previous year, while combine sales dropped sharply to 3,579 units — a decline of more than 35 percent. Dealers also report widespread declines in demand for both new and used equipment.
Economists noted that in 2020, tractor sales increased by nearly 18 percent, with combine sales up by 5 percent. However, in 2023, sales declined sharply. Despite this decrease, prices remain high. Researchers say tariffs are the top concern right now.
Manufacturers are responding by cutting production and reducing inventories. Farm machinery inventories fell from roughly $7.23 billion in late 2022 to $5.72 billion by December 2025, though recent months show slight rebuilding. Used equipment inventories and prices have generally trended lower as farmers delay purchases and extend equipment life cycles.
Trade policy remains a major uncertainty. Mashange notes tariffs imposed in 2025 significantly increased costs for manufacturers, with Deere & Co. absorbing about $600 million in tariff expenses and projecting even higher costs ahead. Although a recent U.S. Supreme Court ruling challenged portions of those tariffs, new trade actions have renewed uncertainty for equipment markets.
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We discussed those sales with the Association of Equipment Manufacturers (AEM) recently at Commodity Classic. AEM Senior Vice President Curt Blades told RFD NEWS that many farmers are making good use of the machines they already own.
“Combines are actually down closer to 40% for the year, which is, you know, some disturbing numbers,” Blades explains. “It kind of continues the trend we’ve been seeing for a little while, just kind of representing the overall softness of the ag market, and knowing that farmers and capital goods, farmers don’t necessarily have to invest in capital equipment, and they can make it last one more year when there are times of uncertainty. And we’ve just kind of been seeing that in the market for the last few months.”
Blades says there are some bright spots in their latest reviews. He found the used equipment market has seen strength over the last year, giving farmers more choices when money is tight.”
