Over the past two years, there’s been dramatic reversal in U.S.-China trade relations. Chinese purchasers now face a 13% tariff on American soybeans, including an already-in-place 3% base tariff. This positive development arrives as both countries continue to deal with the fallout from a trade war that has had devastating effects on agricultural exports. The political climate around this issue is much more optimistic these days. A summit between U.S. President Donald Trump and Chinese President Xi Jinping calmed fears of an all out end to talks aimed at ending the 9-month long tariff war.
As per usual, China has long been the top buyer of U.S. soybean exports. In 2016, Chinese agricultural purchases came to $13.8 billion, constituting 41% of all value in Chinese soybean imports from the United States. As of this year, sales of American soybeans to China have plummeted. Consequently, U.S. farmers are experiencing billions of dollars lost in export revenue. Currently, China has limited its purchases from the U.S., opting instead for Brazilian soybeans, which are cheaper and more competitive.
The largely state-owned Chinese company COFCO had already garnered headlines recently by purchasing three cargoes of U.S. soybeans to use as goodwill gestures. Needless to say, industry analysts are still doubtful about the long-term impacts of those purchases.
“We don’t expect any demand from China to return to U.S. market with this change,” – one trader at an international trading company.
This sentiment is telling of the larger trend that non-Chinese buyers are increasingly opting to purchase Brazilian cargoes compared to American substitutes. In 2024, only about 20% of China’s soybean imports originated from the United States, a stark contrast to 2016’s figure.
This massive disruption of global supply chains quickly churned up our ag export landscape. Soybeans, one of China’s most important staple crops, have been especially hard hit by these changes. Since then, tariffs have rendered U.S. shipments unaffordable for most commercial purchasers. As a consequence, American farmers are finding it more and more difficult to get back into markets they once dominated.
Despite the recent goodwill gesture from COFCO, analysts suggest that any substantial return to pre-trade war purchasing levels remains unlikely. Tariffs are proving to have a huge impact on our agricultural sector. American farmers have enough trouble with access to one of their biggest markets dwindling.