American soybean farmers approached harvest season facing a problem possibly more daunting than a drought or a tornado. China, the world’s top buyer of soybeans, has turned away from American beans at the height of the sales season.
During this spring’s trade war, China imposed reciprocal tariffs on American agricultural products, erasing the previous price advantage American farmers enjoyed and incentivizing Chinese importers to find cheaper alternatives.
Of course, this is said to be having a disastrous impact on American farmers and the ripple effect could harm consumers and the economy as a whole.
Reuters reports that for the first time in more than 20 years, Chinese importers have yet to buy soybeans from the US fall crop, and this is costing farmers billions of dollars in sales. (1) Last year, the United States exported nearly 27 million metric tons to the Asian country, and from January to July of this year, shipments totaled 16.57 million tons. (2) Dan Basse, president of AgResource Co in Chicago, told Reuters that if China remains out of the U.S. market until mid-November, exporters could lose 14 million to 16 million tons in sales.
American farmers who spent years trying to regain market share after Trump’s first trade war in 2018 are finding that China has shifted much of their business to South America, as Brazil’s soybean exports have increased 7.5% this marketing year. Citing traders, Reuters said China’s 23% tariff on U.S. soybeans adds about $2 per bushel, while previously U.S. soybeans were 80 to 90 cents per bushel cheaper than Brazilian soybeans.
To add insult to injury, buyers in China have also purchased at least 10 shipments of soybeans from Argentina, according to Reuters. (3) The cash-strapped nation reduced its export taxes to increase the competitiveness of its grains in the world market. Argentina is currently in talks with the United States for a $20 billion lifeline to stabilize the Argentine peso and keep its free market leader, Javier Milei, in office. The move is a deliberate swipe at American politicians.
The USDA’s September outlook already pointed to lower US soybean exports for the current marketing season. The forecast is for 1.69 billion bushels, up from 1.8 billion bushels in June. The agency has lowered its forecast for the season’s average farm price to $10.10 per bushel, down from $10.25 in June. As of October 14, soybean futures were around $10 per bushel.
Farmers are reportedly trying to expand the domestic market, including the market for renewable diesel that uses soybeans to produce fuel, and looking for buyers beyond China. Mexico, the EU and Southeast Asia are options, but no market is large enough to replace China quickly.
For farmers already deep in debt, that means more bankruptcies and less spending on upgrading or replacing equipment. In August, the American Soybean Association sent a letter to President Trump saying, “Soybean farmers are under extreme financial stress. Prices continue to decline while our farmers are paying significantly more for inputs and equipment. American soybean farmers cannot survive a prolonged trade dispute with our largest customer.”
You might think that lower soybean prices would translate into lower food costs, since soybeans are primarily used for animal feed and cooking oil. However, the cost of agricultural inputs only represents 15.9 cents of every dollar of food costs in the supermarket. Most of what you pay for food covers processing, transportation, packaging and retail.
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The biggest implication for the economy is a possible recession in the Midwest, which ships its soybeans across the Pacific Northwest via railcars loading the grains onto ships that used to sail to China. Economic indicators are still showing strength, as unemployment stood at 1.9% in South Dakota, 2.5% in North Dakota, 3.1% in Wisconsin, 3.6% in Minnesota and 3.8% in Iowa in August. But as government policy continues to put pressure on the agricultural base, the strain may spread to other sectors along with an increase in consumer delinquencies.
“Iowa’s soybean market is around $5.8 billion a year, and this year’s disruptions could cost the state nearly $200 million if prolonged, according to research modeling released in July by ISU,” Axios reported. (4)
The article notes that the drop in soybean exports has knock-on economic effects beyond Iowa fields. It could affect manufacturing companies like John Deere and Vermeer and other industries like insurance and logistics that are closely tied to agriculture.
US trade policy has been particularly volatile this year. A trade deal with China could be finalized, and if it is finalized, farmers could benefit. But the price of some commodities may continue to rise, and U.S. tariffs and immigration policies are partly to blame.
The Yale University Budget Lab considered all U.S. tariffs and foreign retaliations implemented in 2025 through Sept. 26, and said they would result in food prices rising 2.4% in the short term and remaining 2.2% higher in the long term. (5)
Unfortunately, consumers shouldn’t expect a quick reduction in grocery bills. In a rising price environment, it is important to look at the unit price on each shelf label and purchase the option that offers the most per ounce or pound. You may also need to switch to store brands when the quality meets your needs. If beef continues to increase, shift your protein mix toward poultry, beans, and eggs so your meals stay balanced and your bills affordable.
Buy cooking oil when it’s on sale and choose the size you’ll use before it goes bad, then store it in a cool, dark place to preserve its freshness. It’s also helpful to have a simple notebook or app on your phone and record the best prices to recognize a real deal. As you build a small pantry of staples, you may be able to skip a week when prices rise.
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Reuters (1); Reuters (2); Reuters (3); Axos (4); The budget laboratory (5)
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
