U.S.–China Agri Trade Battle Rekindled: South America’s Gain, U.S. Farmers’ Pain
This week’s Allied Quantumsea Research examines the latest escalation in U.S.–China trade tensions following President Trump’s announcement of a 100% tariff on Chinese imports, effective November 1.
U.S.–China Trade Tensions Reignite: 100% Tariffs Threaten Agricultural Flows
On October 10–11, 2025, President Donald Trump announced a new 100% tariff on Chinese imports effective November 1, citing Beijing’s restrictions on critical mineral exports. The move sharply escalated U.S.–China trade tensions, threatening to unravel the fragile truce of recent months.
Markets reacted with concern over a repeat of the 2018–19 agricultural trade conflict, when reciprocal tariffs disrupted commodity flows and reshaped U.S. soybean exports, once a cornerstone of agricultural trade with China. The announcement underscored the vulnerability of bulk agricultural trade and dry bulk freight markets to U.S.–China policy shifts.
By September 2025, China had recorded zero U.S. soybean imports for the first time since 2018, signalling a lasting shift toward Brazilian and South American suppliers.
Soybean Producers Back Under Pressure
Optimism over a U.S.–China agri pact evaporated as talks were cancelled and tariff relief disappeared from the agenda. The American Soybean Association described the breakdown as a “severe setback,” noting that China historically accounts for nearly half of all U.S. soybean exports. Year-to-date, U.S. soybean shipments to China have fallen 39% by volume and 51% by value, while total exports are down 8% year-on-year to 18.9 Mt despite increased flows to smaller Asian buyers.
With China stepping aside, downward pressure on freight demand from the U.S. Gulf and Pacific Northwest to Asia has emerged, only partially offset by shorter-haul sales into Bangladesh, Vietnam, and Egypt, routes that fail to compensate for the lost tonne-miles and highlight the sensitivity of dry bulk freight markets to trade policy shocks.
South America Steps In
Chinese crushers have swiftly filled the supply gap left by the collapse in U.S. shipments. In September, soybean imports reached 12.9 Mt, the highest ever for the month, lifting total arrivals 5.3% higher year-to-date to 86.2 Mt. Brazil supplied over 90% of those volumes, consolidating its dominance in China’s oilseed market, while Argentina seized a late-season opportunity after the Buenos Aires government suspended soybean export taxes (“retenciones”) in late September.
The policy moves immediately boosted Argentina’s FOB competitiveness, triggering a wave of China-bound bookings at the expense of U.S. Gulf loadings. Traders report that Chinese crushers have already locked in Argentine cargoes for November–December delivery, sustaining long-haul Atlantic-to-Far East flows.
Argentina’s Tax Suspension Shifts Trade Flows
The brief suspension of export taxes, aimed at stimulating dollar inflows, reshaped trade dynamics almost overnight. The tax holiday made Argentine beans cheaper than both Brazilian and U.S. offers, prompting Chinese buyers to front-load purchases before duties were reinstated. This surge further undercut U.S. exporters during their peak harvest window, while giving Beijing a strategic hedge against Brazil’s high premiums and Washington’s renewed tariffs.
Pricing Politics Over Economics
Nominally, U.S. soybeans are cheaper than Brazilian beans by $0.80–$0.90/bu, but China’s 23% tariff adds roughly $2/bu, eliminating any price edge. Brazilian premiums stand near $2.8–$2.9/bu over November futures, compared to $1.7/bu for U.S. cargoes. Yet the tariff distortion keeps Brazilian and Argentine beans dominant, sustaining robust South Atlantic–Far East freight flows just as the U.S. harvest season peaks.
For shipowners, this is translated into firm South America–China stems through Q4, while U.S. Gulf tonnage faces softer demand and repositioning pressure toward smaller buyers in Asia and the Middle East.
China: The Unshakable Core of Demand
With 1.4 billion people and the world’s largest hog herd, China remains irreplaceable as a soybean importer, accounting for more than 60% of global soybean trade, a volume that dwarfs all other markets combined. In 2024, the United States shipped 27 million tons of soybeans to China, nearly five times more than to Mexico, its next largest buyer. Yet, since the first Trump administration, Beijing has diversified its import base aggressively: in 2016, 41% of China’s soybean imports came from the U.S., but by 2024 that share had fallen to just 20%. This diversification strategy has enhanced China’s bargaining power, enabling it to rely on Brazil and Argentina for supply security while leveraging U.S. farmers as negotiating tools in broader trade discussions.
Window
China still needs to secure 8–9 Mt of soybeans for December–January arrival, but high Brazilian premiums and political constraints on U.S. cargoes could force it to draw on state reserves until the record 177.6 Mt Brazilian harvest begins shipping in late January. Should a temporary deal emerge, a short-lived U.S. export window could appear in December, offering a brief bump to U.S. Gulf–China Panamax and Supramax demand. Until then, freight strength will remain centred in South America, where steady loadings continue to support ballast demand from the Indian Ocean and West Africa.
The Search for Alternatives: U.S. Efforts Fall Short
Washington has touted new agricultural trade deals as “game changers,” but the numbers tell another story. Taiwan’s pledge to buy $10 billion in U.S. farm goods over four years is merely a continuation of current trends, not an increase. Vietnam’s $1.4 billion memorandum to import U.S. farm products is meaningful, but still a fraction of China’s typical monthly import volume. Even with increased sales to smaller Asian buyers, U.S. soybean exports remain down 8% year-on-year, totalling 18.9 million tons. In short, no alternative market can replace China’s scale or timing: Beijing typically locks in 40% of its U.S. purchases by October, giving farmers early visibility and liquidity, both of which are now absent.
The Road Ahead: A Narrow Window
The renewed U.S.–China trade battle has reshaped global agricultural flows once again. South America is winning market share, Chinese crushers are secure in supply, and U.S. farmers are left hoping for a policy breakthrough. Even as U.S. soybeans remain price-competitive, tariffs and politics outweigh economics — confirming that in the global soybean trade, China remains the kingmaker.
Data Source: Allied