U.S. soybean farmers headed into harvest season facing a problem possibly more daunting than a drought or a tornado. China, the top global buyer of soybeans, has moved away from American beans in the heart of the selling season.
During the trade war this spring, China settled on reciprocal tariffs on American agricultural products, which erased the previous price advantage enjoyed by U.S. farmers, and incentivized Chinese importers to find cheaper alternatives.
This, of course, is reportedly having a disastrous impact on American farmers and the ripple effect could hurt consumers and the economy as a whole.
Reuters reports that for the first time in more than 20 years, Chinese importers have not yet bought soybeans from the autumn U.S. harvest, and it’s costing farmers billions of dollars in sales. [1] Last year, the U.S. exported nearly 27 million metric tons to the Asian country, and from January to July this year shipments totaled 16.57 million tons. [2] Dan Basse, president of AgResource Co in Chicago, told Reuters that if China stays out of the U.S. market until mid-November, exporters could forfeit 14 to 16 million tons in sales.
U.S. farmers who spent years trying to recover market share after Trump’s first trade war in 2018 are finding that China has shifted much of its business to South America as Brazil’s exports of soybeans have jumped 7.5% this marketing year. Citing traders, Reuters said China’s 23% tariff on U.S. soy adds roughly $2 per bushel, whereas earlier U.S. soybeans were about 80 cents to 90 cents a bushel cheaper than Brazilian soybeans.
Adding insult to injury, buyers in China have also purchased at least 10 cargoes of soybeans from Argentina, according to Reuters. [3] The cash-strapped nation dropped its export taxes to boost the competitiveness of its beans on the world market. Argentina is currently in talks with the U.S. 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 stick in the eye to U.S. politicians.
USDA’s September outlook already penciled in lower U.S. soybean exports for the current marketing year. The forecast is 1.69 billion bushels, down from 1.8 billion bushels in June. The agency has cut the season-average farm price forecast to $10.10 per bushel, down from $10.25 in June. As of October 14, soybean futures have hovered around $10 per bushel.
Farmers are reportedly trying to expand the domestic market, including in the renewable diesel market that uses soybeans to make fuel, and by 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 who are already highly leveraged in debt, that means more bankruptcies and less spending on updating 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 drop and at the same time our farmers are paying significantly more for inputs and equipment. U.S. soybean farmers cannot survive a prolonged trade dispute with our largest customer.”
You might think lower soybean prices would translate into lower food costs, as soybeans are used primarily for animal feed and cooking oil. However, the cost of farm inputs only accounts for 15.9 cents of every dollar of the cost of food at the grocery store. Most of what you pay for groceries covers processing, transportation, packaging and retail.
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The larger implication for the economy is a potential recession in the Midwest, which ships its soybeans through the Pacific Northwest by means of railcars that load the beans onto ships that used to sail to China. Economic indicators still show 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 the farming foundation continues to be pressured by government policy, stress may creep into other sectors along with a climb 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 they drag on, according to model research published in July by ISU,” reported Axios. [4]
The article points out that falling soybean exports has economic ripple effects beyond Iowa fields. It could affect manufacturing companies like John Deere and Vermeer and other industries like insurance and logistics that are closely linked with agriculture.
U.S. trade policy has been particularly volatile this year. A trade deal with China could happen, and if it does, farmers may benefit. But the price of some staples may continue to climb, and U.S. tariffs and immigration policies are partly to blame.
Yale University’s Budget Lab considered all U.S. tariffs and foreign retaliation implemented in 2025 through September 26, and said they would result in food prices rising 2.4% in the short-run and staying 2.2% higher in the long-run. [5]
Unfortunately, consumers should not expect a quick break in grocery bills. It’s important in an environment of rising prices to watch the unit price on every shelf tag and buy the option that delivers the most for each ounce or pound. You may also need to trade down to store brands when the quality fits your needs. If beef continues to spike, shift your protein mix toward poultry, beans and eggs so your meals stay balanced and your bills stay affordable.
Buy cooking oil when it is on promotion and choose a size you will use before it spoils, then store it in a cool, dark place to preserve freshness. It’s also helpful to keep a simple notebook or app on your phone and record the best prices so you recognize a real deal. As you build a small pantry buffer with staples, you may be able to skip a week when prices jump.
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Reuters (1); Reuters (2); Reuters (3); Axios (4); The Budget Lab (5)
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