It’s likely China would retaliate immediately, targeting grains and oilseeds, particularly soybeans, should President-elect Donald Trump issue additional tariffs.
During Trump’s first term, retaliatory tariffs led to more than $27 billion in losses for US agricultural exports, with $25.7 billion directly related to tariffs imposed by China, Nicholson said.
While there are lessons to be learned from the 2018-19 trade war, there are new dynamics that must be considered to evaluate the potential impacts, according to the report, “Potential impacts of US-China trade war 2.0 on soybeans.”
Compared to the 2018-19 trade war, China has higher state reserve inventories, increased imports from Brazil and is adapting to low-protein feed formulas that reduce soymeal use,
“In response to the unpredictable and complex nature of geopolitical uncertainties, the Chinese government has proactively implemented strategic measures in recent years to better prepare for potential disruptions,” said the study, co-authored by Stephen Nicholson, Rabobank’s global sector strategist for grains and oilseeds.
Since the last trade war, China has boosted domestic production by 5 million tonnes through its national soybean revitalization plan. It also has built up state reserves, with ending stocks surging by 20 million tonnes from 2021-22 to 2023-24.
China’s soymeal usage has plateaued, mostly due to the government’s promotion of low-protein feed formulas, the report said. Official Chinese data shows the inclusion rate of soymeal in feed formulas dropped to 13% in 2023 from 17.3% in 2019.
China is relying heavily on Brazil for soybeans. In 2023-24, Brazilian soybeans accounted for 74% of China’s soybean imports, matching the level seen during the height of the trade war, the report said. With a significant rebound in Brazil’s soybean production in 2024-25 and a possible reignited US-China trade war, Brazil’s share of the Chinese soybean market could increase to 80% or more.
All of these factors create a scenario in which US soybeans could be shut out of the Chinese market in a new trade war, the report said.
Circumstances also have shifted in the US domestic market with new crushing facilities coming online. While this will mitigate some of the loss, it would only account for about 25% of the reduction in US soybean sales to China.
In addition, a decline of $1.50 to $2 per bushel in the national average price received by farmers is possible, lowering cash soybean prices to below $9 per bushel. Planted acres also are expected to decrease by up to 5 million acres, the report said.
In 2019 and 2020, Trump’s administration distributed $28 billion through the Commodity Credit Corp. (CCC) to largely mitigate the impact of lower prices on farmers. It’s unclear whether similar compensation will be provided since Trump is not running for re-election in 2028 and spending from CCC funds is attracting more attention and scrutiny.
“Therefore, US farmers would likely bear more of the losses themselves this time,” the report said.
In addition, a potential trade war could have spillover effects on global amino acid prices. High prices and reduced supply could prompt Chinese feed mills to substitute some soymeal with feed amino acids.
“As the world’s largest producer and exporter of most feed amino acids, China may see a rise in domestic consumption amid the renewed trade war,” the report said. “This could potentially trigger price rises for amino acids such as lysine, methionine and threonine.”
