Tariffs, Trade Wars, and the Rise of Brazil’s Soybean Empire
After having tariffs imposed on China by the U.S. in April 2025, the country slapped a 34% tariff on U.S. farm goods, stripping the U.S. soybean market of most of its competitiveness basically overnight. The market was devastated, and China quickly turned to a new supplier: Brazil. As U.S. soybean farmers plead with Washington to save their biggest export market, Brazil’s growers are celebrating record shipments to China. One country’s crisis has become another’s treasure.
For decades, China was the single largest customer for U.S. soybeans. About 60% of soybean exports went to China in peak years, spending over $12 billion a year on the good. But after recently surpassing the U.S. in soybean production, Brazil’s advantage grew. Its record harvests, competitive prices, and favorable exchange rates made the country attractive to importers, making it a reliable source for soybeans globally and an even better alternative source for China. After imposing the tariffs, by June, Brazil had supplied about 87% of China’s soybean imports—a historic high for the country.
Brazil’s newfound soybean dominance isn’t just about large-scale harvests—the country is being heavily invested in by China as well. China’s China Oil and Foodstuffs Corporation (COFCO) is tripling the port’s ability to handle exports and creating new rail and river corridors to lower transportation costs from Brazil’s interior. By investing in Brazil’s logistics, Beijing is building long-term reliability into its food supply—and reducing its dependence on U.S. agriculture for good. By July, the two countries had implemented the ‘Soy China’ initiative, which creates a soybean supply chain tailored entirely to Chinese standards. For Brazil, it means guaranteed sales. For China, it means food security on its own terms.
As China invests more and more in Brazil, U.S. soybean farmers are becoming increasingly concerned about the market. This August, the American Soybean Association wrote an urgent letter warning of “dire long-term economic damage” if the current trade rupture continued. The letter came following the fact that China had not booked a single shipment of soybeans by August, which is unprecedented. Historically, China bought over half of U.S. soybean exports, so losing that market long-term would mean billions in lost revenue. After the tariff, U.S. soybean futures plunged to their lowest point of the year—$9.77/bushel. Even modest rebounds since then haven’t erased the sense that prices are stuck in a weak cycle. Farmers are getting hurt from both ends, being put in a cost-price squeeze. Fertilizer, machinery, land rent, and oil prices have all risen, but their soybeans are selling for less, making profit margins exceptionally thin and, in some cases, turning negative. If the U.S. loses permanent market share in China, many family farms in the Midwest could face bankruptcy or be forced to consolidate.
On August 11th, President Donald Trump posted to Truth Social, urging China to quadruple its purchase of U.S. soybeans in parts of their ongoing trade talks. After the post, the soybean market spiked briefly, reflecting traders’ hopes that a big Chinese purchase could be on the horizon. But farmers aren’t convinced. They know that Brazil is filling the gap with record shipments, and one social media post can only go so far. The temporary relief was welcomed, but many feel that it is too little, too late, as harvest approaches and no contracts are signed. As of August, the White House has yet to make a statement on the concern.
While the U.S. is in a soybean crisis, Brazil has made significant strides in becoming China’s new go-to supplier. The country has had record soybean harvests in recent years, and because of its tropical climate, growers can sometimes manage two harvests a year, instead of just one, meaning Brazil can increase production quickly and keep China’s crushing plants running year-round. The country has also focused on making stable trade relations with Beijing, making it a safer political bet for China. While Brazil has been working hard to become the perfect alternative supplier, it has faced immense international criticism. The increased production of soybeans is tied directly to the country’s deforestation issue in the Amazon and Cerrado regions. But China doesn’t seem to care too much about that, since the need for reliable, large quantities of soybeans outweighs sustainability concerns. Brazil offers large volumes of soybeans and flexibility, which is valued significantly more by China.
China's shift from the U.S. to Brazil for soybeans is increasingly looking less like a temporary substitution and more like a realignment in soybean trade, making Brazil China’s go-to producer for soybeans permanently. For China, the shift reduces its reliance on U.S. agriculture, and for Brazil, it's essentially economic gold. While the change significantly benefits Brazil, it raises questions about sustainability and the U.S. farmers’ ability to survive. The drastic change has many questioning the U.S.’s status as an agricultural powerhouse and whether Brazil is now positioned to take its place in shaping the future of the global food supply.
