Tariff impacts on U.S, Brazil, China soybean triangle

CHAMPAIGN, Ill. — China shifted a major portion of its soybean purchases to Brazil when the 2018 trade war kicked in.

What could new tariffs bring?

Joana Colussi, University of Illinois Department and Agricultural and Consumer Economics instructor, Research and Learning Innovation coordinator and farmdoc team member, analyzed potential shifts in global soybean markets under the newest tariff announcements.

Last year, China imported $12.84 billion worth of soybeans from the United States, accounting for more than half of the $24 billion in agricultural goods exported to China in 2024.

The United States and Brazil combined supply over 80% of global soybean exports, while China accounts for around 60% of total world soybean imports.

“U.S. and Brazil soybeans are the top agricultural export to China, but with the escalation of global trade tensions following Trump’s new tariff announcement, what can we expect for this trade relationship?” asked Colussi in a farmdoc video.

“If we look back to 2017, before the first round of the trade war, Brazil emerged with more exports. Brazil has increased its soybean exports by 45%, from 2.5 billion bushels in 2017 to 3.6 billion bushels in 2024. Meanwhile, the U.S. has kept its global exports at around 2 billion bushels.

“In other words, much of the growth in global soybean demand in recent years has been supplied by Brazilian soybeans.”

In 2018, the first year of the trade war when China implemented a 25% retaliatory tariff on the United States, Brazil’s share of soybean exports in China peaked at 82%, while the U.S. share dropped to just 18%.

Although China’s share of U.S. soybean exports has since recovered to around 50%, it remains below the pre-2018 level of 60%.

“American soybeans now face double the tariffs in the Chinese market compared to the levels during Trump’s first term. And this time other major trading partners like the European Union are also affected. In fact, all of the top 10 markets for U.S. soybeans have been hit with tariffs,” Colussi said.

“This is no longer just a trade war between China and the U.S. It has escalated into a global trade war.”

According to the American Soybean Association, U.S. soybean farmers could lose around $6 billion annually.

Meanwhile, Brazil is expecting a new record for soybean exports, driven by a record harvest — over 6 billion bushels — and stronger Chinese demand.

The Brazilian Association of Vegetable Oil Industries projects soybean exports will reach 3.9 billion bushels this year. In 2024, China accounted for 73% of Brazil’s soybean exports.

“Brazilian soybeans have also become more attractive to Chinese buyers due to the stronger U.S. dollar, which has made Brazilian soybeans more competitive,” Colussi said.

“In addition, Brazil has improved its logistics, cutting transportation costs and narrowing the gap with the U.S. infrastructure. In fact, Chinese companies are also investing in Brazilian ports, roads and railways.

“The tension between the U.S. and China is already pushing up soybean prices in Brazil. Soybean export premiums at Brazilian ports have reached their highest level for this time of year since 2022, when the Russia-Ukraine conflict began.”

In March, the additional price buyers pay over the benchmark surged by around 70%. On April 3, one day after Trump’s tariff announcement, Brazilian port premium hit $1 per bushels above Chicago benchmark prices.

“While Brazil is the largest supplier capable of replacing U.S. soybeans in the Chinese market, other counties could benefit, as well, including Argentina and Paraguay, the world’s third and fourth largest soybean exporters,” Colussi said.

“The current environment favors higher exports from Argentina due to lower export taxes introduced in January and a more stable macroeconomic outlook.

“Estimates suggest that the current South American soybean harvest could set a new record, surpassing 8.5 billion bushels — about 55% of global soybean production.

“So, as the global trade war escalates, it’s reshaping the soybean market in real time.”