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.
China’s import of US soybeans, in particular, also spiked last year, rising 6.5% from 2023, according to Reuters’ calculations of official customs data.
Buyers from China — the world’s largest soybean consumers — were likely stocking up on the crop to hedge any geopolitical risks ahead of Trump’s second term, analysts said.
Trump has threatened to put 60% tariffs on all Chinese goods during his second presidential term, igniting fears of an intensification in trade tensions.
“If the US ramps up tariffs on Chinese imports, China could target US agricultural imports as retaliatory tariff countermeasures,” Rajiv Biswas, an international economist and the author of “Asian Megatrends,” told Business Insider.
“US soybean imports are likely to be a key target for China’s retaliatory tariff measures due to the very large scale of China’s soybean imports from the US,” he added.
The power of the soybean market
The US is the world’s second-largest soybean producer after Brazil. It accounts for about a quarter of China’s import of the oilseed, which it typically uses for animal feed.
During his first term as president, Trump slapped heavy tariffs on Chinese imports.
In response, China imposed 25% tariffs on US agricultural produce, including soybeans, sending American soybean exports to China sharply lower.
The tariffs on some of these farm imports were waived ahead of the US-China trade deal in January 2020.
Impact on American farmers
A replay of retaliatory tariffs during Trump’s second presidency could hit US soybean farmers.
“In a scenario where China imposes retaliatory tariffs on US soybeans in 2025, the impact would again likely be a substantial economic loss for the US soybean industry,” said Biswas.
A study from 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 soy exports to the tune of hundreds of millions of tons.”
“Brazil and Argentina would claim the lost market share, which would be extremely difficult for American growers to reclaim in the future,” the two associations said in October, cautioning against a trade war.
There isn’t enough demand from the rest of the world to offset a major loss of soybean exports to China, they added.
A trade war would create a “ripple impact across the US, particularly in rural economies where farmers live, purchase inputs, use farm and personal services, and purchase household goods,” wrote the two agriculture trade associations.
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 soybean demand — made worse by the country’s ongoing economic downturn — would also weigh on the 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 mitigate price impacts,” BMI Research wrote last week.
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