- China is loading up on soybeans due to US trade war fears.
- China’s soybean imports rose 6.5% in 2024, hedging against potential Trump trade policies.
- Intensification of US-China trade tensions could hit the soybean trade, affecting US farmers and rural economies.
China is stockpiling more than semiconductor chips amid its trade war with the US.
Last year, China imported a record 105.03 million metric tons of soybeans — a key crop that was embroiled in Donald Trump’s tariff war with China during his first presidency.
Chinese imports of US soybeans, in particular, also rose last year, rising 6.5% from 2023, according to Reuters calculations of official customs data.
Buyers from China – the world’s biggest consumer of soybeans – are likely to stockpile the crop to hedge against any geopolitical risks ahead of Trump’s second term, analysts said.
Trump has threatened to impose 60% tariffs on all Chinese goods during his second term as president, sparking fears of an escalation in trade tensions.
“If the US raises tariffs on Chinese imports, China could target US agricultural imports as retaliatory tariff countermeasures,” Rajiv Biswas, an international economist and author of Asian Megatrends, told Business Insider.
“U.S. soybean imports are likely to be a prime target for China’s retaliatory tariff measures due to the very large scale of China’s soybean imports from the U.S.,” he added.
The power of the soybean market
The US is the second largest producer of soybeans in the world after Brazil. It accounts for about a quarter of China’s oilseed imports, which it typically uses for animal feed.
During his first term as president, Trump imposed heavy tariffs on Chinese imports.
In response, China imposed 25% tariffs on US agricultural products, including soybeans, driving US soybean exports to China significantly lower.
Tariffs on some of these farm imports were removed ahead of the US-China trade deal in January 2020.
Impact on American farmers
A repeat of retaliatory tariffs during Trump’s second presidency could hit American soybean farmers hard.
“In a scenario where China imposes retaliatory tariffs on US soybeans in 2025, the impact is likely to again be a substantial economic loss for the US soybean industry,” Biswas said.
A study by the American Soybean Association and the National Corn Growers Association shows that a new trade war would result in an “immediate drop in corn and soybean exports of up to hundreds of millions of tons.”
“Brazil and Argentina would claim lost market share, which would be extremely difficult for US growers to recover in the future,” the two associations said in October, warning against a trade war.
There is not enough demand from the rest of the world to offset a large loss of soybean exports to China, they added.
A trade war would create a “ripple effect across the US, particularly in rural economies where farmers live, buy inputs, use farm and personal services and buy household goods,” the two agriculture trade associations wrote.
As it is, Chinese soybean importers have diversified their sources since Trump’s first presidential term, with Brazil a major beneficiary of the trend.
Any decline in Chinese demand for soybeans – exacerbated by the country’s ongoing economic downturn – would also weigh on trade in a well-supplied market.
“Although a Trump presidency could reignite US-Mainland China trade tensions and potential Chinese tariffs on US soybean exports, we anticipate that the expected decline in Chinese demand will moderate price impacts,” BMI Research wrote. last week.
