Trump’s China tariffs fuel Brazil’s soy boom while US farmers struggle

Trump’s China tariffs fuel Brazil’s soy boom while US farmers struggle

In the agricultural heartland of Brazil, cowboy hats were tipped, guaraná flowed, and optimism ran high at the XinguTec farming fair along Highway 158. Farmers celebrated more than just their abundant cheese and fruit platters — they were welcoming a new economic reality. With US President Donald Trump escalating a trade war with China, Brazilian soy producers are eyeing a windfall, the Washington Post reported.

China turns to Brazil as US soy is hit with tariffs

China, the world’s largest buyer of soybeans, imports more than 100 million tons annually to feed its massive livestock industry. For years, American and Brazilian farmers shared that demand. But during Trump’s first trade war with China in 2018, US soybean exports plummeted, allowing Brazil to overtake the United States as the world’s top soy supplier.

With Trump back in office and tariffs climbing again — China recently imposed a 125% levy on US soybeans in response to Trump’s 145% duties on Chinese goods — that shift is hardening. In late April, China purchased just 5,446 tons of soybeans from the US, a steep drop from earlier in the month. By contrast, Brazilian exports to Chinese ports like Zhoushan surged nearly 50%.

Brazil already accounts for more than 70% of China’s soybean imports and is expecting a record harvest this year. According to EXAME, a leading Brazilian business magazine, the country’s soy sector stands to gain up to $7 billion in additional revenue from the trade shift.

US farmers face financial strain and market loss

While Brazil celebrates, American farmers are grappling with a sharp decline in demand and falling prices. Soy once sold for $17 per bushel in 2022 but has now dipped to around $10 amid a global supply glut. With one-third of US soy exports usually going to China, the loss is profound.

“It’s crippling when you lose 30 percent of your demand in a short period of time,” said Scott Gerlt, chief economist at the American Soybean Association. Many US farmers are questioning the future of their operations as overhead costs remain high and export opportunities shrink.

Jim Sutter, CEO of the US Soybean Export Council, said that while some farmers remain hopeful Trump will secure a favourable deal, others are recalling how the previous trade war left them behind. “The winners were Brazilian farmers,” Sutter noted, “and the losers were the Chinese consumers and the American soy farmer.”

Brazil’s environmental gains come with a cost

Brazil’s rise as a soy powerhouse is relatively recent. Through decades of research, scientists developed tropical varieties of soybeans that could thrive in Brazil’s climate. Since then, cultivation has expanded north from the country’s cooler regions into the vast interior — often at the expense of forests in the Cerrado and Amazon biomes.

Confresa, a leading soy-producing city in Mato Grosso, now resembles a midwestern US farming town more than an Amazonian outpost. But that transformation comes with environmental consequences. Analysts warn that increased demand from China could accelerate deforestation as more land is cleared for soy plantations.

“That is a concern for the world,” Sutter said.

Despite these concerns, the mood in Brazil’s soy fields is buoyant. “We’re hopeful,” said fair organizer Beatriz Costa, flashing a smile beneath her cowboy hat. “This trade war is really encouraging for us in agriculture.”