With Donald Trump’s return to the presidency, US agriculture is poised for another potential shift, particularly within the grain and feed sectors. Trump’s trade policies, characterised by his approach to China and North American neighbours, have left a distinct mark on the agricultural landscape.
American farmers, who by and large (39%) strongly support Trump, are willing to go along for the ride.
Is a ‘tariffic’ war coming?
Trump’s proposed tariffs of 10% to 20% on imports, with a substantial 60% on Chinese goods, could lead to retaliatory actions from China, one of the primary importer of US soybeans and grains.
He took about 11 months to impose tariffs during his first term as President.
The US imported $195 billion in agricultural products in 2023—a figure that has surged by 280% over the past two decades. Potential tariffs on imports from China, Mexico and many other countries could result in farmers facing an attack on their margins.
“When retaliation strikes, the humble soybean, as the single largest agricultural purchase that China makes from the US, might once again find itself in the eye of the storm,” says Carlos Mera, Head of Agri Commodities Market Research at Rabobank to Milling and Grain.
Soy prices have already dropped 25% over the past year, adding to the challenges for US farmers.
Rabobank also speculated on possible measures to counterbalance these pressures on US farmers, including government subsidies to help farmers store soybeans if tariffs escalate.
The European Union could emerge as an alternative buyer, with a possible trade deal committing the EU to purchasing US soybeans, although this could be complicated by supply limitations and price competition. US exports 50 million tonnes a year of soybeans and 15 of soy meal, the EU imports around 13-15 million tonnes of soybeans and 16 million tonnes of soy meal annually. That is, EU could absorb all US soy meal exports but only a portion of soybeans, given that it already imports from cheaper producers like Brazil and Argentina.
Rabobank also highlighted complications from the EU’s new deforestation regulation (EUDR), which will require comprehensive traceability for imported soybeans.
“I don’t think the EU can commit to buying that much from the US—not all US production will have the traceability requirements,” Mera notes. As the EUDR is scheduled to take effect by the end of this year, the EU may need to source compliant beans from all major producers, including the US, Brazil, Argentina, and Paraguay, potentially limiting its capacity to rely solely on US soybeans.
Exports to China
China, the world’s largest soybean importer, has grown increasingly reliant on South American sources due to previous US tariffs. The US share of soybean exports to China declined sharply during Trump’s first term as President, while Brazil’s share grew to 76%. A renewed tariff battle could further push China to South American suppliers, potentially lowering demand for US grains.
“US farmers are concerned that potential US tariffs on imports from China could see the latter respond by cutting its imports of US soybeans and cereals,” says John Buckley, Milling and Grain’s Commodity expert. “Along with large US harvests, this has already restrained prices of soybeans on Chicago futures.”
Chinese importers have recently ramped up their purchases of US soybeans, anticipating possible trade disruptions around the US elections. While China represents a smaller market for US corn, its importers may also be linked to some of the recent sizable US corn orders recorded by the USDA under “unknown buyers.”
Potential trade disruptions
If a trade dispute over US tariffs arises, China might shift more of its soybean purchases to South America—a region that already supplies the bulk of China’s soybeans and corn. This shift could negatively impact US agricultural exports. In the near term, however, Buckley suggests that China and other importers may increase US agricultural purchases to build up reserves before any new tariffs are introduced.
According to Chinese customs data, China imported nearly 90 million tonnes of soybeans from January to October 2024, up 11.2% year-on-year. August imports set a monthly record, and 2024 is expected to close as a record-breaking year, boosted by favourable crush margins. Brazil remains China’s largest soya supplier.
Mexico, another major customer for US agricultural exports, including corn and soy, may also face renewed trade tensions. During Trump’s first term, discussions surrounding his proposed border wall strained trade relations. Mexican officials even threatened to import more corn from Latin America in response.
“Market unease may also resurface about trade relations with Mexico, the USA’s key corn customer and a significant soya buyer too,”says Buckley. “Trump’s radical plans on immigration and repatriation will be watched closely for possible repercussions from the Mexican side.”
Currency competitiveness
The strengthening US dollar since Trump’s re-election is also likely to influence agricultural exports. A strong dollar could make US products more expensive on the international market, potentially lowering demand.
For US wheat, which has already struggled to compete with lower-cost suppliers in the Black Sea and Europe, a strong dollar could exacerbate this disadvantage. However, tight global wheat supplies may provide an offsetting factor, supporting US exports despite currency challenges.
Feed milling; tariffs on ingredients
The American Feed Industry Association (AFIA) has also voiced its position on the Trump administration’s trade policies, particularly their potential impact on the animal food industry.
“The animal food industry is critical to the success of US agriculture, exporting $13.4 billion in feed, feed ingredient, and pet food products in 2023 alone, and we expect that number could increase under an administration that prioritises fair trading practices,” says AFIA President and CEO Constance Cullman to Milling and Grain.
The AFIA is hopeful that Trump’s administration will address barriers affecting competitiveness, citing a potential for bringing trade partners back to negotiations.
Tariffs on imported ingredients are a focal point of AFIA’s concerns. Many feed producers rely on imported vitamins, minerals, and amino acids essential to animal feed.
“We also encourage the president to take measured action toward foreign suppliers where alternative suppliers simply do not exist, such as single foreign suppliers of key vitamins, minerals, and amino acids,” AFIA notes.
On the regulatory front, the industry expects a continuation of Trump’s previous “two-for-one” policy, where two regulations were to be repealed for every new regulation introduced. AFIA anticipates that responsible, science-based regulations that support animal care, product quality, and global competitiveness will be a priority.
Global feed trade
AFIA also acknowledges the growing complexity of global trade, with factors such as pandemics, animal diseases, and geopolitical tension impacting the industry. With these risks in mind, the AFIA stresses the importance of maintaining an open dialogue with government leaders to navigate these challenges and create a reliable business environment.
The association noted that Trump has a track record of holding trading partners accountable and negotiating bilateral agreements, such as the China Phase One agreement, that could help expand the reach of US animal food exports.
AFIA urged the president to address what it describes as “unscientific policies” that pose risks to key trade relationships, such as Mexico’s ban on genetically modified corn.