China, the world leader in soybean imports, has stopped buying crops from the US to put pressure on Trump ahead of a trade-focused meeting with Xi Jinping.
The beginning of the harvest in September is usually the time when China, the world’s largest soybean importer, sends a wave of orders to farms in the American states of Illinois, Iowa, Minnesota, and Indiana.
However, this year, Chinese importers are no longer buying. As retaliation for tariffs imposed by President Donald Trump, Beijing has severed American farmers' ties with their largest and most profitable foreign customer.
China was the destination for half of US soybean exports last year. That is $12.6 billion.
For the first time since November 2018, China did not import soybeans from the US in September, according to Monday data from China's General Administration of Customs, as reported by The Washington Post.
"We are in uncharted territory in terms of the complete absence of Chinese buyers for the upcoming crop," said Even Pay, director of agricultural research at Trivium China, a research firm based in Beijing.
China still has another weapon in the trade war
For Beijing, stopping soybean imports from the US has been an easy and almost cost-free way to pressure Trump ahead of a planned meeting with Chinese leader Xi Jinping in South Korea at the end of this month.
Trump told reporters on Sunday evening aboard Air Force One that he wants Beijing to return to the previous level of purchases and that he is confident the Chinese side is ready to reach an agreement on soybeans.
However, while American farmers lobby Trump to reintroduce them to the Chinese market, there is no similar pressure in China for the government to allow purchases from American suppliers. This "gives Beijing great negotiating power," Pay said.
Trump has called the decision not to buy soybeans from the US "an economically hostile act" on social media and stated that the United States is considering retaliating by not buying used cooking oil from China.
However, Beijing has ignored Trump's threats, and analysts say the Chinese state is ready to extend the freeze on purchases for the remainder of the year.
China has thus turned its massive soybean market into a weapon in the trade war, notes the American daily.
Why does China have the largest soybean import?
China consumes much more soybeans than any other country in the world, but cultivates less than a fifth of what it needs to cover all the tofu and soy sauce used in Chinese cuisine.
The rest of the needed soybeans are bought from abroad - importing more than the rest of the world combined - and the United States has traditionally been one of its main suppliers.
These imported beans mainly feed a huge number of pigs, chickens, and other animals, as the consumption of meat by higher-income Chinese families has rapidly increased. Despite efforts to develop alternatives, soybeans accounted for 13% of animal feed in 2023.
The remaining imported soybeans are largely turned into cooking oil: the mild flavor of soybean oil and its ability to withstand high temperatures make it perfect for wok-cooked dishes. Chinese producers prefer imports from the US or Brazil over domestic soybeans, which are more expensive.
For American farmers, it is difficult to find a replacement for Chinese demand. "It's simply a huge market," said Phil Luck, director of the economics program at the Center for Strategic and International Studies (CSIS) in Washington.
How Beijing reduced its dependence on American farmers
Beijing has made significant efforts to reduce its reliance on soybean imports from the US, especially after the end of the trade conflict in Trump's first term in 2020, when Beijing agreed to buy $200 billion worth of American products, including soybeans - although it bought much less than promised, the newspaper cited.
Since then, Beijing has pushed Chinese farms to consolidate and expand their domestic production. Testing programs for genetically modified crops, previously banned, have been launched. And China aims to reduce the proportion of soybeans in animal feed to 10% by 2030, down from 18% in 2017.
A report from the Chinese Ministry of Agriculture published in May shows that through these efforts, import demand will steadily decrease in the coming years.
However, due to limited agricultural land and increasing demand, China is still far from its goals of meeting half of its soybean needs with domestic crops and will rely on imports in the coming years, analysts said.
Where does China get soybeans from?
"From China's perspective, the US is an unpredictable supplier," said Niu Haibin, director of the Center for Latin American Studies at the Shanghai Institutes for International Studies.
Tariffs mean that American soybeans no longer have a price advantage, and China has already identified other suppliers to fill the gap. "The more we rely on alternative sources, the dimmer the prospects for US soybean exports to China become," Niu said.
Among these suppliers are Argentina, Uruguay, and even Russia. However, Brazil, the world's largest soybean exporter, has been the big winner of the US embargo on China.
Normally, China alternates between suppliers from both hemispheres, buying from Brazil during the harvest season from March to June and then from the US for the rest of each year.
But this year, instead of turning to American farms, Beijing continued to place orders in Brazil. In August, it imported $4.7 billion worth of soybeans from that country and only $100 million from the US.
This situation continued in September, when China bought 7.2 million tons of soybeans from the South American country - 93% of its total exports, according to Anec, the national association of grain exporters in Brazil.
China's efforts to secure Brazilian soybeans go far beyond placing large orders.
Chinese state companies have taken stakes in key Brazilian ports Paranaguá, Açu, and Santos. And COFCO, China's largest agricultural importer, holds exclusive rights to operate a new major terminal in Santos, which opened in March and will expand the port's capacity by 15 million tons per year by 2026 when it reaches maximum capacity.
Additionally, Beijing is working to reduce barriers for Brazilian exporters to access its vast market. The two countries are planning to build a railway connecting Brazil to the Chancay port in Peru, which could dramatically reduce transport times to Asia.
Effects on US-China trade negotiations
With abundant supply from South America, China is confident it can leave American farmers out as long as necessary to reach a trade agreement with Trump.
China once feared that the US would not sell it soybeans, but now America is eager for Beijing to buy them, as shown in an article widely distributed last week on the social networking app WeChat.
In response to Trump's recent threat to retaliate by halting trade in cooking oil - which Chinese analysts interpreted as stopping purchases of used oil that can be converted into biodiesel by the US - the state-run Global Times newspaper said that "China's used cooking oil is not short of buyers."
This defiant tone is supported by China's considerable stocks. Its soybean imports reached a record high in May and increased by 5.3% from the previous year for the January-September period, reaching 95 million tons, according to the Chinese customs agency.
China is in a position where it could resist for months - possibly until the arrival of new South American crops in early 2026 - without needing to take soybeans from the US, Pay said.
In Beijing, "there is certainly a sense that the US is in chaos and that there is room to exert political pressure on the targeted groups," said Jack Zhang, director of the Commercial War Laboratory at the University of Kansas.
Additionally, Xi has thus obtained something to offer to Trump in exchange for what China really wants.
"Part of the calculation is that the US will negotiate these small but pressing concerns and will give in on some of the larger structural issues that China is more worried about," Zhang said. These include US export controls on advanced computer chips.
But even if an agreement is reached this month, it may be too late for American farmers to recover the orders already lost.
"China is in a pretty good position. We really want to solve this problem. They don't need to," said Luck, a CSIS analyst. "Even if China were to start placing orders the day after the Xi-Trump meeting, American soybean farmers would probably lose half the season, so we are pressed for time," he emphasized.
T.D.