Because of the trade policies of President Donald Trump, the agriculture sector in the United States is under extreme financial distress.
Tariffs on imported fertilizer are high. Production prices and labor shortages, because of Trump’s immigration policies, are increasing (up to 50% of agricultural workers lack legal status). At the same time, commodity prices for the country’s major crops — soy, corn, and wheat — are low and likely to fall further, even as farmers anticipate record harvests. Farm debt is at record highs. Total farm sector debt is projected to approach $390 billion by year’s end. High interest rates, driven in significant part by the out-of-control federal deficit, are weighing heavily on farmers. Interest costs are up 18% over two years. Farm bankruptcies are rising toward a five-year high and will almost certainly exceed 2024 levels.
Soybean farmers have been hit particularly hard by Trump’s policies. In September, China imported no soybeans from the U.S., the first month of zero shipments since late 2018. In response to Trump’s tariffs, China imposed its own 34% tariff on U.S. soybean imports and has turned to buying soybeans from Brazil and Argentina.
It’s one thing to take on China, a rapacious manipulator of markets and the preeminent U.S. adversary.
But to illustrate the insanity of U.S. agriculture policy, Trump is also providing significant political and financial support for Argentina’s president, Javier Milei. He is doing so even as Milei’s suspension of export duties triggered a surge in Chinese purchases of soybeans from Argentina.
Before Trump’s trade wars with China, Beijing was a large purchaser of U.S. soybeans. Year in and year out, China purchased about 33% of U.S. soybean production. Over half of U.S. soybean exports went to China. From 2011 until Trump’s first trade war with China in 2019, China routinely bought almost $13 billion of soybeans each year. Now, Chinese imports of U.S. soybeans have fallen to zero.
The Trump administration has announced $3 billion in financial assistance for farmers, including soybean producers, but that is small comfort against the possible permanent loss of the Chinese market. China understands that American farmers are a critical constituency for Trump. Rural America is very pro-Trump. China is adopting policies to inflict lasting damage on America’s farmers and undermine Trump’s base of support.
China is reconfiguring its soybean supply chain from the U.S. to Brazil and Argentina. Over the past several years, China has invested in the ports, railways, and logistics networks that now move Brazilian and Argentine soybeans efficiently to China. As noted, as recently as 2018, over half of U.S. soybean exports went to China. But in 2024, over 70% of Chinese soybean imports were sourced from Brazil. In the early 1990s, Brazil had only a 2% market share of the Chinese soybean market.
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Arguably, U.S. soybean farmers will never again have significant access to the Chinese market. Brazil and Argentina are the global low-cost producers of soybeans. Brazil’s cost of production advantage exceeds 20%. The cost of farmland is lower in the two countries, and labor costs are much lower. Brazil particularly enjoys a comparative advantage over the U.S. in producing soybeans and other grains. Because of its location near the equator, Brazil can grow both soybean and corn crops in a single year. Agriculture is more profitable in Brazil.
Because of Trump’s policies, America’s soybean farmers are increasingly a significant part of the U.S. welfare state and yet another drain on U.S. taxpayers.
James Rogan is a former U.S. foreign service officer who has worked in finance and law for 30 years. He writes a daily note on the markets, politics, and society. He can be followed on X and reached at [email protected].
