Recurring Casualty: Agriculture In The Trade War

The US agricultural industry is once again caught between Washington and Beijing's intensifying economic rivalry. China imported zero soybeans from the US last month, the first time in seven years. For US farmers, this is reminiscent of the 2018 US-China soybean dispute, but this year's trade war has taken a new shape, defined by Beijing's resolve to apply maximum pressure on critical economic choke points. Tensions remain high and the export sales window for US soybean—the seasonal period when the US is the primary supplier to the global market—is closing. Without a breakthrough, US farmers not only risk billions in lost revenue but also further ceding market share to global competitors eager to fill the gap.

The Lasting Impact of the 2018 US-China Trade War

Over the past two decades, the US and China established a strong soybean trade relationship. Between 2007 and 2017, US soybean exports to China tripled from a decade earlier. China's demand for soybean and the US soybean industry grew almost simultaneously, elevating the two countries dependence on the other's soybean market. China has grown into the world's largest importer of soybeans by a significant margin, importing on average 61% of the world's traded soybean supplies. As domestic soybean production did not scale, China turns to international suppliers for the bulk of its soybeans—in 2017, 89% of total soybean consumption in China was imported, with the US accounting for one-third of these imports.

The escalatory trade war between the US and China in 2018 devastated US soybean farmers. Following months of tit-for-tat threats, the two launched a series of tariffs on the other. China imposed 25% tariffs on $34 billion of US exports, including soybeans. While China's historically high consumption of soybeans decreased in 2018, falling 4% from the year before while on average its consumption increased at an average 9% each year since 2000, US production of soybeans was at a record high that year. In 2018, US soybean exports plummeted to just $3.1 billion a steep fall from the year before of $12.2 billion (57%).

As the trade war continued to escalate through 2019, Washington and Beijing signed a "Phase One" trade agreement. Under the deal, China committed to purchasing an additional $32 billion worth of covered agricultural products above 2017 levels during 2020 and 2021—a move that gave significant tariff relief for US soybean farmers. Following the agreement, US soybean exports rebounded, reaching a peak of $18.7 billion in the 2022-2023 marketing year. But despite this rebound, the US did not regain the market share it once held in China: by 2024, the US accounted for only one-fifth of Chinese soybean imports, while Brazil accounted for 71%. This shift underscores how the 2018 trade war inflicted lasting structural damage to US farmer access to the Chinese market.

How the 2025 Trade War is Different for US Soybean Farmers

In 2025, the US-China trade war entered a new phase, signaling more explicit strategic decoupling and supply-chain diversions. Last month, China imported 12.87 million metric tons of soybeans—the second highest amount on record—yet zero were imported from the US and no orders are on the books. This marks a new separation of US soybean farmers from their largest export market not seen since November 2018. While Washington and Beijing remain under an extended trade truce—under which US tariffs on Chinese imports are held at around 30% and Chinese duties on US imports are held at around 10%—set to expire next month, tariff levels remain well above pre-trade war norms. China's effective boycott of US soybeans stems largely from these elevated tariffs, leaving American farmers at a disadvantage relative to competitors.

Soybean farmers anticipated their exports to China would suffer as the trade war escalated, yet many hoped a favorable outcome for US agriculture would have been negotiated by now. Instead, they are facing increasingly thin profit margins this year. Input costs have risen sharply, with the price of common fertilizers increasing between 16% and 39% since January. This surge is compounded by sweeping global tariffs imposed by the US in April. Certain fertilizer imported from Canada—the largest supplier to the US—has been subject to a 10% tariff since March, while tariffs on components used in farm machinery have added yet another layer of expenses. At the same time, soybean prices have fallen dramatically, dropping from roughly $17 per bushel in 2022 to $9.34 last month. These challenges have been further intensified by President Trump's crackdown on undocumented migrants this year, leaving US farms especially vulnerable. Many farms rely heavily on immigrant labor, with an estimated 42% of US farmworkers being undocumented.

China's boycott of US soybeans since late May reflects the new shape the US-China trade war has taken this year—one defined less by tariffs and more by strategic leverage. Like the 2018 trade war, China imposed retaliatory tariffs in March on US farm goods, dealing a blow to US farmers before the harvest even began. Since then, Beijing has shown a willingness to match US escalation in kind, expanding export controls and signaling that far-reaching economic retaliation is no longer limited to agriculture as this boycott comes amid other trade measures. China's recent decision to broaden restrictions on rare-earth exports—including products containing as little as 0.1% of Chinese content—illustrates its readiness to decouple additional parts of its economy from US supply chains.

Scaling back on soybean purchases and increasing rare earth restrictions reveal China's strategy to increase pressure on the US through large-scale market disruptions. Ahead of the highly anticipated Trump-Xi meeting next week at the Asia-Pacific Economic Cooperation (APEC) summit in South Korea, President Trump has signaled he wants to "make a deal on everything," including Chinese purchases of American crops. The build-up to this meeting could see China place a large-scale order of US soybeans as a sign of goodwill, similar to when it purchased more than 3 million metric tons of soybeans shortly before a face-to-face meeting between former President Biden and President Xi on the sidelines of the APEC meeting in 2023. Yet the current phase of the trade war suggests tariff bargaining may no longer be enough as this conflict appears to have become more about who controls the supply chains and who can substitute faster.

Business Implications

Caught in the trade tussle, the Trump administration has sought to mitigate adverse impacts on American farmers. First, it implemented reforms to the H-2A temporary agricultural workers program, lowering the wages that H-2A employers are required to pay by $1.13 to $3.18 per hour, depending on the state. The administration estimates these changes will save employers over $24 billion over the next decade. However, as the latest government shutdown extends into its 24th day, the Department of Labor is still not accepting or processing H-2A job orders and labor certifications.

The US Department of Agriculture (USDA) has reopened 2,100 county offices nationwide to release more than $3 billion in aid to farmers—funds that had originally been frozen during the shutdown. While the administration is considering a larger aid package of over $10 billion, the immediate $3 billion is intended to provide temporary relief for farmers struggling to meet payments amid the ongoing trade war. This aid comes from the Commodity Credit Corporation, through which the USDA's Farm Service Agency distributed $23 billion in 2018 and 2019 to farmers affected by export losses.

Government aid alone, however, will not ensure the long-term survival of US farmers. Retaliatory tariffs threaten to erode long-standing customer bases as other countries fill market gaps left by reduced US exports. Other American agricultural industries—notably beef—could face greater risk of export disruption in the future. Unlike other US agricultural sectors that have diversified their markets enough to cushion against the loss of Chinese buyers, US beef has not. The industry took a major hit this year when China declined to renew registrations for most US beef plants and later suspended 11 facilities. The findings of China's investigation into whether beef imports harm its domestic industry are expected next month and could result in additional trade barriers, further compromising US beef exporters. On the horizon, US pork—for which China is the third-largest market, valued at $1.11 billion in 2024—could become the next target for China increasing pressure on American agriculture through potentially non-tariff trade barriers. While these sectors and others are vulnerable to trade shocks, soybeans still face an outweighed risk: nearly half of US soybean production is exported, far exceeding domestic consumption, and most of those exports go to a single buyer—China.

For many US farmers, it has become clear that trade disruptions and volatility reflect a broader trend in US-China trade relations, making diversification essential. With new soybean producers emerging globally, US farmers must navigate an increasingly complex trade landscape and adopt innovative strategies to market their crops. Such shifts create opportunities for other countries to expand agricultural imports from the US as part of their trade bargains, absorbing American exports traditionally routed to China. A potential avenue for boosting domestic soybean consumption is through expanding biofuel production and exports. In the meantime, rapid investment in agricultural storage facilities could support US farmers avoid selling crops prematurely simply to make room for unsold products.

China, on the other hand, has announced a 10-year plan to become an agricultural powerhouse and ensure national food security, suggesting the soybean breakup will be long-term. The plan includes modernizing agricultural practices and advancing technology innovation, which could support the country in developing a robust domestic soybean industry. Nevertheless, China remains heavily dependent on imported soybeans to meet demand. Its shift toward Brazilian imports creates similar dependency risks, as a lack of supply diversification can leave markets vulnerable to disruption.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.