On the ground, U.S. soybean exports to China still struggle with severe challenges – even with the latest tariff changes, which are supposed to ease trade tensions. China’s state-owned COFCO continues to be the most modest of buyers, tendering for three U.S. soybean cargoes. This came on the heels of the summit between U.S. President Donald Trump and Chinese President Xi Jinping. This decision was seen as a goodwill gesture, a strong indication that Beijing did not want to escalate trade fights any further.
In 2016, China imported $13.8 billion of U.S. soybeans – a full 41% of all its soybean imports. It’s a very different world out there than it was back then. So far in 2024, China has purchased less than 20% of its soybeans from the U.S. The new and escalated trade politics are taking a heavy toll on American farmers. This year, they’ve already lost billions of dollars in actual exports as Chinese buyers have almost completely ceased buying American produced crops.
The situation is made even more precarious by the state of our nation’s economy. For now, U.S. soybeans remain uneconomical for Chinese buyers, particularly due to more favorable pricing for Brazilian counterparts. The current tariffs on U.S. soybeans are a 16% tariff (13% added to the 3% base tariff). As a result, American soybeans can’t compete on the Chinese market. Despite these tariff reductions, the cost of U.S. soybeans is still too costly for large-scale commercial purchasers.
Non-Chinese buyers have relied more heavily on Brazilian soybean cargoes, highlighting the premium between U.S. and Brazilian goods. A trader at an international trading company remarked on the current situation, stating, “We don’t expect any demand from China to return to U.S. market with this change.” Most traders seem to think that just changing the tariff schedules won’t create enough additional demand for U.S. soybeans regardless. This feeling is resulting in a bearish outlook on the market.
Trump’s trade war has already caused significant damage to global supply chains, most notably in the soybean market. Up until 2017, soybeans were the number one U.S. export to China—acting as a number one cash crop for U.S. farmers. President Trump’s ongoing trade war with China has dramatically changed these dynamics, causing U.S. soybean exports to China to plummet by 75 percent.
U.S. soybean producers will have to make every effort to regain their lost market share in China. In Brazil, high import tariffs paired with opportunistically low prices from Brazil pose a serious risk to American farmers. The fight to pointlessly regain their shattered foothold in one of their biggest and most successful markets.