US to cut tariffs on farm machinery as costs rise

The White House said that with farmers and manufacturers under pressure from soaring costs fuelled by the war in the Middle East, US President Donald Trump on Monday signed an executive order to cut tariffs on agricultural machinery.

The executive order reduces the tariff on combine harvesters and certain other equipment from 25 percent to 15 percent.

In addition, the White House added in a briefing that foreign companies can qualify for a 10 percent tariff if their production equipment contains at least 85 percent U.S.-made steel or aluminum.

These changes take effect on 8 June and will remain in force until 31 December 2027.

As the important mid-term elections approach, farmers have begun to voice concerns about rising costs, and with the outbreak of war in the Middle East and soaring diesel and fertiliser prices, they are now facing even more pressure.

The US-Israeli campaign of strikes against Iran in late February was met with a response from Tehran – the Strait of Hormuz was virtually blocked. This important waterway normally carries about a fifth of the world's oil and gas reserves and is indispensable for the global fertiliser trade.

The blockade has also led to a rise in aluminium prices, as the Strait of Hormuz is also a major transport route from the Middle East.

„The latest developments have had and continue to have an impact on industries in the country that use agricultural equipment, industrial equipment and machinery, and other related products,

This is the latest decision by Mr Trump to adjust the steel and aluminium duties he imposed after companies expressed dissatisfaction with the overly strict rules.

U.S. tariffs on steel, aluminium and copper are 50 per cent.

In April, Mr Trump decided to reduce the duties on goods believed to contain high levels of these metals to 25 per cent, applying the duty to the total value of the goods rather than the amount of metals they contain, in a move to simplify the duty calculation system.

In addition to agricultural machinery, Mr Trump's latest order states that the lower 15 per cent tariff will also apply to certain heating, ventilation and air conditioning systems that are mainly intended for use in residential premises.