
If a soybean futures chart is any indication, the market has been bracing for some time now for what may be Trump Trade War, Part 2.
Soybean futures managed a modest early-2025 rally to put some distance between the four-year lows around $9.47 per bushel posted late December but remain well below last year’s $12-plus peak.
Slumping prices largely reflect a bumper U.S. harvest and a record crop expected from Brazil, the combination of which is expected to swell global soybean stockpiles to an all-time high. While a strong jump in U.S. exports has buoyed prices recently, Trump’s just-announced tariffs hardly would seem to be a recipe for an extended rally.
Last weekend, President Trump ordered 25% tariffs on Mexican and most Canadian imports and 10% on goods from China, starting February 4. Mexico and Canada, the top two U.S. trading partners, immediately vowed retaliatory tariffs. China is the No. 1 market for U.S. soybeans.
We may have seen this movie before. China may retaliate, as it did during Trump’s first administration, by slashing purchases of U.S. ag goods. The last go-round in 2018-19 hit U.S. soybeans hard, and China has since shifted most of its soy purchases to Brazil, the world’s top producer. Soybean futures briefly sank near $8 and averaged just over $9 those two years.
Retaliatory tariffs during Trump's first term resulted in around $27 billion in lost U.S. agricultural exports, including $25.7 billion in sales to China, according to Rabobank analysts. Depending on how the current dispute plays out, a second trade war could cost soybean farmers $3.6 billion to $5.9 billion in annual production value, according to a 2024 study by the National Corn Growers Association and American Soybean Association.
But opportunities could appear as a result of a reordering of global trade relationships. For example, a trade deal between the U.S. and the European Union could result in all or most of EU soy and soymeal import demand shifting to the U.S. and away from South America, according to a recent Rabobank report.
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