China retaliates against the US trade war by importing soybeans

Since the US-China summit on October 30, international soybean prices have surged. This is due to market bets that China will resume imports of US soybeans. By boycotting US soybeans, China has hit the Trump administration where it hurts – American farmers – demonstrating its determination to hold its own in trade negotiations. As the world’s largest consumer, China’s intention to use soybeans as a bargaining chip to pressure the US is very clear.

The Chicago Mercantile Exchange (CME) futures price (main contract), an international benchmark, broke through $11 per bushel on October 30, driven by the summit, reaching a 1 year and 3 month high. US Treasury Secretary Bessenter stated on October 26, after the US-China ministerial consultations, that China would increase imports of US-produced soybeans, subsequently leading to a sustained price increase.

Following the summit, US President Trump stated that “large-scale purchases of agricultural products such as soybeans are about to begin.” Soybean prices, after an initial decline, have rebounded.

Airi Urano, chief researcher at the Marubeni Research Institute in Japan, pointed out, “China accounts for half of the US soybean exports, a volume that cannot be compensated for by increased purchases from Japan and other countries. Going forward, if China increases its purchases of US soybeans, it will be a positive factor for the market, and the extent of the impact will depend on the quantity purchased.”

Soybean prices had been sluggish for some time. In March, when China imposed tariffs on soybeans in retaliation for the Trump administration’s high tariffs, prices fell to around $9 per bushel due to market concerns about reduced demand. China increased purchases from Brazil and Argentina while reducing contracts for US soybeans, and soybean imports from the US finally dropped to zero in September.

Philip Luck of the Center for Strategic and International Studies (CSIS) commented, “This is a perfect storm (the worst-case scenario) for American farmers.” In addition to low prices, rising domestic material prices due to high tariffs and labor shortages caused by immigration policies have further exacerbated the situation. The American Soybean Association estimates that average production costs exceed $12 per bushel, leading to widening losses for farmers.