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Deere CEO sees trade war making a lasting impact on agriculture

Samuel Allen, chief executive officer of Deere, said Wednesday that his main concern regarding President Donald Trump's duties was his long-term effects on the supply of agricultural commodities.

For example, if China were looking for soy in a country like Brazil, these farmers could produce it quickly, which could lead to oversupply over a longer period. This means that tariffs will continue to hurt US farmers, even after they are lifted, because of surpluses created by China in search of alternative suppliers.

Allen's second concern is the highly indebted farms that are struggling in the short term.

Allen, who also chairs the Competitiveness Council, said China's intellectual property theft was a worthwhile issue that should be resolved. But he does not agree with Trump's approach, saying he does not believe that tariffs make the US more competitive with China and does not create more friction between countries.

Allen prefers to promote negotiations away from the public eye.

"There should be talks with China and its leaders," he said. "We think this should probably be done better outside the public forum and in more private conversations that could lead to more fruitful negotiations."

Allen emphasized Trump's strong will and skills as a negotiator as reasons he could be more successful than his predecessors in private talks with China.

Once again, all eyes will be on Trump and President Xi Jinping at the weekend's G20 summit, where the two leaders could negotiate a truce on the trade.

One question he agrees with the president is the rate increase of the Federal Reserve.

"I think they should pause to see if the economy continues to progress robustly," Allen said. "They can always raise one or two rates later, but I'm afraid they will cause a further rate hike, and that may be the event that is causing the slowdown in the economy. I would like them to stay for a few quarters. "

Allen said Deere had seen a slowdown in orders as customers were worried about what could happen with higher rates.

The slowdown in home sales, however, has not yet hit its orders for construction equipment, as this equipment can also be used for oil production and fracking.

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