Soy to the World
Does waning export competitiveness spell doom for US soybean farmers?
This article was written by UC Berkeley ARE PhD student Katie Baker. It is the second of several excellent articles written by students in my ARE 242 class this spring that I will publish here.
Soybeans are the top US agricultural crop export, generating over 230,000 jobs across farms, manufacturing, services, trade, and transportation sectors. On average, every $1 of exported agricultural goods generates $2.09 of domestic economic activity by providing income to American workers. That income ripples into spending across rural communities. From fueling cars to feeding livestock, soybeans touch nearly every aspect of American life—and global trade.
About half of all soybeans produced in the US are sold on the global market. China’s imports account for about 60% of global soybean trade. While the US has historically supplied much of this demand, ongoing trade tensions make the future of US-China soybean trade uncertain.
We’ve been here before. During Trump’s first term in 2018-2019, escalating tariffs deliberately targeted agricultural exports, with soybeans caught in the crosshairs. These crops generate tens of billions of dollars annually, especially in primarily Republican-led states.
As the graph above shows, US soybean exports to China (blue bars) sharply contracted from a 5-year average of 30 million metric tons to 13 million metric tons in 2018—less than half of what farmers had come to expect from their largest buyer. In response, China strengthened its trading partnerships with Brazil, the other global powerhouse soybean producer, and Argentina to meet its growing demand. Meanwhile, trade partnerships with other countries and $28 billion in government aid softened the short-term pain for American farmers.
At the time, US soybean exports faced a 25% tariff. Earlier this year, Chinese tariffs on US goods climbed to 125% above January rates. Although the current 90-day agreement caps reciprocal tariff rates at 10%, other existing duties leave the effective tariff rate on soybeans higher. Farmers fear the long-term consequences of losing market share as importers turn to other countries that offer predictably low trade barriers.
Although US soybean exports to China rebounded to 35 million metric tons after the first trade war resolved, Brazil and Argentina have since established themselves as China’s dominant soybean suppliers. In 2024, Brazil’s share of the Chinese soybean market rose to 71%, while the US share fell to just 21%. To remain profitable, US producers must seek new buyers.
Does waning export competitiveness spell doom for US soybean farmers?
Probably not. Soybean exports typically ship after the fall harvest, leaving open the possibility that the current trade war could be resolved before then—or strengthened trading partnerships with other countries may pick up the slack. For now, commodity traders aren’t sounding the alarm.
Policymakers have other levers to incentivize domestic soybean sales. Domestic capacity to process the crop into soymeal for animal feed and soybean oil for cooking and biofuel is growing. Soybean-oil based biofuel, dubbed renewable diesel, can be used in diesel engines without restriction. Soybean oil demand within US borders is bolstered by policies supporting the blending of renewable diesel with petroleum diesel to reduce transport emissions. Soybean farmers may find eager buyers among new processors hoping to capitalize on the renewable diesel boom.
In North Dakota, two soybean processing plants have opened since 2023. The Green Bison crushing plant and refinery, a joint venture between ADM and Marathon Petroleum, exemplifies the growing connection between the agricultural and energy sectors. Each year, the plant produces 600 million pounds of refined soybean oil to meet renewable diesel demand and 1.28 million tons of soybean meal to feed livestock.
The future of policies supporting demand for soybean oil-derived biofuel remains uncertain, although the Trump Administration recently proposed substantial increases in the quantity of renewable diesel required to be used in the US. There may not be enough domestic demand for the soybean meal that will result from increased crushing, but exports may help bridge the gap.
Soybean meal exports are up 10% from last year, now valued at $6.7 billion, and are projected to grow. Notably, China imports little processed soybean meal from the US, typically importing whole soybeans instead. Top buyers of soybean meal include the Philippines, Mexico, Canada, and Colombia. This diversified market base, along with growing domestic processing infrastructure, suggests soybean meal exports may be more resilient than whole soybean exports in the current trade landscape.
Meanwhile, ongoing research and development into alternative uses for soybean products such as compostable bioplastics and petroleum product replacements could help balance supply and demand if export markets remain constrained. Though unlikely to replace the volume of Chinese demand, these novel end uses may become more attractive if a soybean glut is on the horizon.
Although domestic biofuel demand offers some relief, soybean farmers face mounting challenges. Brazil’s rise as a leading supplier to China underscores the fierce competition in the international agriculture market. Losing market share to these countries isn’t just a short-term inconvenience; it has long-lasting consequences for how US soybean products compete in the global market.