TARIFFS Suddenly *BANKRUPTING* ALL

are responsible for damage to farmers

for now. But don't worry, stimulus is

coming and eventually the tariffs will

actually benefit you. Even though the

tariffs right now are destroying farmers

and the first stimulus checks from

tariffs will be going to farmers within

the coming week. Farmers don't know if

it's going to be enough to help the

destruction that Donald Trump is causing

to farmers. Now, in this, we're going to

break down how much of the farming

industry is being impacted by this and

how this could impact companies like

John Deere, for example. But remember,

you've got a lot going on with tariffs.

When we issue tariffs against China,

China, as it did in 2018, issues

retaliatory tariffs. In fact, just this

morning, the Chinese literally responded

to the United States and said that the

United States has imposed unreasonable

tariffs that create conditions uh that

do not expand bilateral trade. This was

the Chinese Commerce Ministry

spokesperson just today. Uh and this was

in response to China being asked about

buying our soybeans. Yeah. Because see,

we make a lot of well, we grow a lot of

soybeans in America. Way more than I

thought. Take a look at this soybeans

planted. Uh this is a chart showing us a

breakdown of 2023. We have 35% of our

crop uh that's grown in America being

corn, 31%

soybeans,

19% wheat. And the states that produce

the most are Illinois, Iowa, Minnesota,

North Dakota, Missouri, Indiana,

Nebraska, South Dakota, Ohio, and

Kansas. The vast majority of these red

states who voted for Donald Trump,

unless you zoom in, you see like

Illinois is listed as blue over here,

but let's be real, that's mostly just

Chicago. Or if you zoom in over here,

you get like Minneapolis and St. Paul

that are blue. But the rest, your farm

territories are mostly Donald Trump

voters. And Donald Trump voters are

getting absolutely reamed by these

tariffs because you're getting hit from

two angles. Not only are costs for

machinery at like steel or equipment or

bins or silo equipment or whatever going

up because of tariffs and steel and

aluminum tariffs, but margins on soybean

are soy, US soybeans are plummeting

because our ability to export soybeans

is tanking because China is just saying,

you know what, if you're going to tariff

us, we're just not going to buy your

soybeans anymore. Now, you might wonder,

okay, well, why does it matter? Well,

again, soybeans big production in the

United States, but we don't eat all the

soybeans. Understand this. In the world,

the United States is the number two

producer of soybeans, followed by Brazil

at 169 million metric tonses. We're at

118 million metric tonses. The next

third country is less than half of our

production for soybeans.

And so soybeans get sent all over. The

problem is China doesn't want to buy our

soybeans because of the trade war. And

so prices for US soybeans are plummeting

below

the cost to produce soybeans. This means

farmers who usually one year do corn and

then one year do soybeans and then one

year do corn and then one year do

soybeans as part of their crop rotation

are getting screwed in 50% of the years.

And it's easy to go, oh well then they

should just not do soybeans. But

remember 31% of what we produce are

soybeans. If we take that much

production and push it into cotton or

sorghum or wheat, we'll just tank the

prices of that below the cost of

production. And what happens? More

farmer bankruptcies.

Remember this. China buys a lot of

soybeans. Statistically, they are the

largest buyer of our soybeans. In fact,

if we look at the data, we could see

that I want to say it's somewhere around

60. Here we go. Yeah.

of our exports, 60% of our soybean

exports have historically gone to China,

at least in the seven years prior to the

trade war. Of our total domestic

production,

so 31% being soybeans, of the total

production that we produce in America,

we export 28% to China. So like one in

four soybeans that we grow in the United

States used to go to China. And now

China's basically like hey f you. And so

now the that it's not so much that like

oh well we you know can still sell the

other you know 72%. It's not that. It's

that because we've lost such a big buyer

the price falls below the cost where

it's profitable to actually grow the

product at all. That screws farmers. Now

this is where a lot of people have been

asking like okay so like what does this

end up doing to like stocks like John

Deere? Well, it's no surprise that John

Deere's revenue has fallen 9 to 12% in

the last two quarters when you compare

it to last year. But it's not just their

revenue that's falling. Their gross

profit is down, suggesting that their

cost, steel and aluminum tariffs

probably are showing up in their cost of

goods sold. So their margins are going

down and they're selling less. So

they're selling less and they're making

less money. That sucks. Now some people

look at John Deere and they're like,

"Hey, it's a buy the dip." You know,

Wall Street has an expected 25.6% growth

rate for John Deere in earnings over the

next four years on average. That's 25

25% growth. That's great. And they're

trading for a PE ratio of 25.3, which

means you're at a one peg. That seems

really low. But if that earnings growth

actually falls to just 10%, they'd be at

a very expensive PEG ratio. So you have

to be careful because it's all in that

growth rate for John Deere. And this is

where people were like, "Okay, well, if

if Donald Trump issues stimulus to US

farmers that he's bankrupting, maybe

they'll go buy uh, you know, John Deere

products because it's not going to be

the Chinese that are going to buy John

Deere products." Look, in 2024,

John Deere collected revenues of $4.3

billion from Asia, Africa, Oceanana, and

the Middle East. All of those regions

together represented just 8.4% 4%. Which

means China is probably less than 5% of

John Deere's revenue. The vast majority

of John Deere's revenue comes from the

United States. And Donald Trump is

bankrupting

US farmers.

Here you can see the prices of corn

have fallen since liberation day. You

know, all of the COVID gains are

basically gone. In addition to that,

China has made zero purchases of US

soybeans,

which is problematic. This is why, you

know, Donald Trump is like, "Yeah, we're

going to have to stimulate the sector

because we kind of screwed it." Now,

he's dangling this carrot that in the

longer term, oh, the tariffs will end up

benefiting you. Unclear about that.

Especially since China, according to the

Hong Kong, South China Morning Post says

China prepares for long US soybean

standoff with huge Brazilian imports.

That's the thing. See, back in the '9s,

China already started thinking about

decoupling from the United States, which

got more extreme in 2018 where China has

built up their infrastructure support of

Brazil in favor of Brazilian soybean

production over relying on the United

States. So, China's been preparing for

this long game for a very long time.

Keep in mind, the last time Donald Trump

stimulated the farm industry was after

the 2018 tariffs

wre havoc amongst our farmers, shrunk

our farming industry in favor of

countries like Brazil, where exports

fell over 10 billion dollars in 2018 to

2019, soybeans being the hardest hit. So

then Donald Trump issued stimulus which

ended up stimulating farmers to the tune

of around $22,000 per operation. Okay,

great. But what does $22,000 do you?

Does that buy you a new $1 million John

Deere tractor like a Reaper? No, of

course not. You know, some of these

tractors are 500 grand to a million

bucks. Some of them are multi-millions

of dollars. The AI service contracts

that John Deere now wants to get their

recurring revenue model is really sexy

to people who want to bet on AI with,

you know, infrastructure products or

capital good products and recurring

revenue, SAS revenue, that's fantastic.

But if we're selling fewer machines

because farmers are going bankrupt in

America and most of John Deere's

revenues are coming from US farmers,

then Donald Trump's tariffs are directly

responsible

for the bankrupting of US farmers and

the damage that's being caused to John

Deere. And John Deere stock doesn't even

reflect all the real damage yet. You

know, maybe there's some hope that this

stimulus will actually help prop up

farmers to the tune where they're going

to go buy machines again, but I think

this is survival stimulus. This isn't

This is like a This is more of a bailout

than it is stimulus.

So, keep that in mind. Now, I mean,

presumably stimulus this time would be

greater than the, you know, $22,000 on

average per operator that we saw uh in

2018. Mind you, a lot of that money

could go to big operators. So, the, you

know, actual check that many smaller

farmers get might be substantially

smaller than that. Uh but the reality is

this is one of the beginning

transitions

of damage that we are seeing from

tariffs. And these tariffs, these tariff

impacts will keep popping up in areas

that we're just not aware of uh until

they happen. And

a lot of people are cheering that oh

tariffs so far aren't really causing a

lot of, you know, problems or inflation,

whatever. You know, back in April in the

Mickey Kevin membership and even on the

channel, we were pretty clear that we

actually went bullish towards the end of

April. Like, you know what? You don't

need to sell here. Set trailing stops

because the long-term impacts of tariffs

are going to take months to years to

realize. And, you know, this isn't this

is an early warning of some of these

impacts that are coming out. Uh, and

it's just really going to be a matter of

time before we actually lay out all of

the damage that's being done. But this

soybean situation is a disaster for our

American farmers. And it's likely that

any kind of stimulus that Donald Trump

promotes over the next few weeks, that's

the expectation that we're going to get

the stimulus over the next few weeks is

going to be too little too late. Which

is unfortunate because, you know, I

don't think the American farmers deserve

that. Especially since I would argue

that a lot of American farmers probably

voted

for Donald Trump, thinking that Donald

Trump was going to be good for, you

know, American farming.

Oops. That sucks. So, we'll see. But the

coming weeks are the are where we're

expecting to see where this stimulus

actually ends up coming uh from or if it

ends up coming and how much it ends up

coming in at. So, we'll see. But that's

uh that's what's going on with the

American farmers and John Deere knows

about this.

>> We'll we'll try a little advertising and

see how it goes. Congratulations, man.

You have done so much. People love you.

People look up to you.

>> Kevin Pra there, financial analyst and

YouTuber. Meet Kevin. Always great to

get your take.