China supplies key US crop before Trump takes office

China is stocking up on soybeans amid fears of a trade war with the United States. Chinese soybean imports increased by 6.5% in 2024, protecting against potential Trump trade policies.

China is stockpiling more than semiconductor chips as part of its trade war with the United States.

Last year, China imported a record 105.03 million tonnes of soybeans, a key crop involved in Donald Trump's tariff war with China during his first presidency.

Chinese imports of U.S. soybeans, in particular, also increased last year, up 6.5% from 2023, according to Reuters calculations from official customs data.

Chinese buyers, the world's largest soybean consumers, were likely stocking up on the seeds to hedge against any geopolitical risks heading into Trump's second term, analysts said.

Trump has threatened to impose 60% tariffs on all Chinese goods during his second presidential term, raising fears of intensifying trade tensions.

“If the United States raises tariffs on Chinese imports, China could target U.S. agricultural imports as retaliatory tariff countermeasures,” said Rajiv Biswas, an international economist and author of “Asian Megatrends.” to Business Insider.

“U.S. soybean imports will likely be a key target of China's retaliatory tariffs due to the very large scale of China's soybean imports from the United States,” he added.

The power of the soy market

The United States is the world's second largest producer of soybeans after Brazil. It accounts for about a quarter of China's oilseed imports, which it generally uses for animal feed.

During his first presidential term, Trump imposed heavy tariffs on Chinese imports.

In response, China imposed 25% tariffs on U.S. agricultural products, including soybeans, causing U.S. soybean exports to China to drop significantly.

Tariffs on some of these agricultural imports were lifted before the U.S.-China trade deal was concluded in January 2020.

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Impact on American farmers

A repeat of the retaliatory measures imposed during Trump's second presidency could hit US soybean producers.

“In a scenario where China imposes retaliatory tariffs on U.S. soybeans in 2025, the impact would likely again be a substantial economic loss to the U.S. 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 decline in corn and soybean exports, to the tune of hundreds of millions of tons.”

“Brazil and Argentina would claim lost market share, which would be extremely difficult for U.S. producers to recover in the future,” the two associations said in October, warning of a trade war.

There is not enough demand from the rest of the world to offset a significant loss in soybean exports to China, they added.

A trade war would have “ripple effects across the United States, particularly in rural economies where farmers live, purchase inputs, use agricultural and personal services, and purchase household goods,” the two trade associations wrote agricultural.

As it stands, Chinese soy importers have diversified their sources since Trump's first presidential term, with Brazil a major beneficiary of this trend.

Any drop in Chinese demand for soybeans, compounded by the country's current economic slowdown, would also weigh on trade in a well-supplied market.

“While a Trump presidency could reignite U.S.-mainland China trade tensions and possible Chinese tariffs on U.S. soybean exports, we expect the expected decline in Chinese demand to mitigate impacts on prices,” BMI Research wrote last week.

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