Brazil Is In Pole Position to Supply Soy Beans To China Replacing American Farmers As Tariffs Bite

5th April 2025

Donald Trump has declared a trade war on most of the world. The world is already fighting back and it is not going to be pretty.

American Soy Beans Sanctioned By China
China has significantly reduced its imports of American soybeans due to recent tariffs and trade tensions. With the imposition of a 34% tariff on U.S. agricultural goods, including soybeans, many traders believe that importing American soybeans may no longer be viable. This has accelerated China's shift toward alternative suppliers like Brazil, which is expected to benefit from increased demand3.

It seems unlikely that China will completely cease importing American soybeans, but the volume is expected to drop substantially.

Brazil is well-positioned to supply more soybeans to China and replace American beans. Brazil is the world's largest soybean producer and exporter, with a record production of 169 million metric tons expected for the 2024/2025 season2. Approximately 73% of Brazil's soybean exports already go to China, making it a key supplier.

Brazil has been expanding its soybean production capacity, with regions like Mato Grosso leading the way. However, logistical challenges, such as transportation infrastructure and port capacity, could limit how quickly Brazil can scale up exports to fully replace U.S. soybeans.

China's growing demand for soybeans, driven by its livestock and food industries, ensures that Brazil will remain a critical supplier.

Brazilian soybeans are generally cheaper than American soybeans on the global market. This is largely due to Brazil's favourable exchange rate, which makes its exports more competitive. However, the production costs for soybeans in Brazil, especially in regions like Mato Grosso, tend to be higher than in the U.S. due to factors like transportation and fertilizer expenses.

Despite higher production costs, Brazil's soybeans remain attractive to buyers like China because of their lower overall price compared to American soybeans.

American farmers stand to lose billions of dollars if China shifts its soybean purchases to Brazil. Historically, China has been the largest buyer of U.S. soybeans, accounting for nearly half of American soybean exports. However, with the imposition of tariffs, the cost of U.S. soybeans has risen, making Brazilian soybeans more attractive to Chinese buyers2.

The financial impact on American farmers is significant. For example, soybean prices have dropped by 3.4% recently, and farmers are reporting losses of around $25 per acre due to the tariffs3. If China fully transitions to Brazilian soybeans, U.S. farmers could lose one of their largest export markets, potentially leading to farm closures and economic hardship.

This shift also strengthens Brazil's position as the world's leading soybean exporter, further challenging the competitiveness of American agriculture.

Other products are being sanctioned by China that will hit American farmers
China has imposed tariffs on a variety of American agricultural products beyond soybeans. These include:

Corn: Facing additional duties, making it less competitive in the Chinese market.

Wheat: Tariffs have reduced demand for U.S. wheat exports.

Cotton: A significant export product now subject to higher tariffs.

Pork and Beef: Both are impacted by increased tariffs, affecting U.S. livestock farmers.

Fruits and Vegetables: Tariffs have raised prices for these products in China.

Dairy Products: Including milk and cheese, which are now less accessible to Chinese consumers.

China's sanctions aim to diversify its agricultural imports by sourcing from other countries like Brazil, Argentina, and Australia.

Donald Trump has it backwards. Tariffs are not a tax on foreign countries as it is tax that consumers will pay. His pre-election promise to reduce prices for Americans look likely that the opposite will be true. Some American farmers are going to feel it very soon with consumers not far behind.