Tractor and farm equipment manufacturer John Deere has confirmed its plans to build a manufacturing plant in Mexico, defying previous threats by United States president-elect Donald Trump to punish the company with tariffs if it moves some of its production south of the border.

In September, the Illinois-based company announced plans to shift some of its production from factories in Iowa and Illinois to Mexico by the end of 2026. Following the announcement, Trump said he would impose 200% tariffs on equipment sold in the U.S. that was made in Mexico.

With a planned investment of US $55 million, John Deere plans to move ahead “regardless” of political changes, said Gecimar Morini, company manager for Mexico, Central America and the Caribbean, in a statement.

The new plant will initially manufacture mini track loaders and mini wheel loaders targeted at the national market, and will be John Deere’s first facility in the country dedicated exclusively to manufacturing equipment for the construction sector.

“Our focus is on developing the company in the agricultural, construction, and, mainly, infrastructure sectors,” Morini emphasized.  

John Deere’s investment announcement comes one day after Trump reiterated his intentions to slap high tariffs on Mexican exports, this time extending the threat to Canada, as well. 

Local media reports that the new plant will be located in the northern state of Nuevo León, where John Deere has its own dedicated export lane in the Laredo-Colombia International Bridge. The company currently has production plants in Ramos Arizpe, Saltillo and Torreón, Coahuila, as well as in Monterrey, Nuevo León.  

The manufacturing center is scheduled to start operations in 2026. 

Why is John Deere relocating production to Mexico?

According to data compiled by John Deere, Mexico is the second largest consumer of its construction equipment in Latin America, with a growth of 76% since 2022. 

“We see Mexico as an attractive market, which is why we are investing in the expansion of our dealers and growth in new territories,” Morini said.

Furthermore, Morini said the compact equipment segment is still developing in Latin America, with an estimated market size of 4,000 units, he added. In contrast, more established markets like the U.S. see approximately 100,000 units sold. 

With reports from Expansión, Cluster Industrial and The Wall Street Journal