On Wednesday, Treasury Secretary Scott Bessent took to social media to share insights about a recent conversation he had with former President Donald Trump and Argentina’s newly elected president, Javier Milei. During their discussion, they explored potential financial support plans aimed at stabilizing Argentina's economy. Bessent mentioned that the Treasury is currently engaged in negotiations with Argentina regarding a significant $20 billion swap line with Argentina’s central bank, as reported on X.com.
In a bid to enhance capital flow, Argentina has also announced the suspension of its export taxes this week, particularly on essential products like soybeans. This strategic move comes amid ongoing negotiations with the U.S. Furthermore, Argentina seems to be reinforcing its trade relationship with China, which has reportedly placed orders for at least 10 cargoes of soybeans from the South American nation, according to a Reuters report citing several traders.
These developments have raised concerns among U.S. soybean farmers, who heavily rely on exports to China. Many farmers are feeling the pinch as they face increased competition from Argentine soybeans, especially given that tariffs have significantly raised the cost of U.S. soybeans during this critical harvest season. The U.S. Department of Agriculture has noted that China has not purchased any U.S. soybeans since May, exacerbating the situation for American farmers.
Caleb Ragland, President of the American Soybean Association (ASA), voiced his frustration in a statement on Wednesday. He pointed out that while U.S. farmers are witnessing falling soybean prices and a bustling harvest season, headlines focus on the U.S. government's plan to extend $200 billion in economic support to Argentina. This support comes as Argentina eliminates its soybean export taxes to facilitate the sale of 20 shiploads of soybeans to China within just two days.
Ragland emphasized the plight of U.S. farmers, stating, “The farm economy is suffering while our competitors supplant the United States in the biggest soybean import market in the world.” In 2024, soybeans accounted for nearly 20% of the U.S.’s cash crop receipts, generating approximately $46.8 billion, according to USDA data. However, retaliatory tariffs from China—ranging up to 34%—have severely impacted U.S. farmers, allowing countries like Brazil and Argentina to capture a larger market share.
The market share dynamics for U.S. soybeans have shifted dramatically. As of 2024, Brazil accounts for 71% of Chinese soybean imports, a stark contrast to the mere 2% share it held three decades ago. Ryan Loy, an assistant professor and extension economist at the University of Arkansas Division of Agriculture, highlighted that the market is driven by pricing, stating, “It’s a function of who is cheaper on the market.”
This evolving market landscape poses significant challenges for rural communities. In regions where agriculture constitutes up to 20% of local employment, fluctuations in soybean demand directly affect farmers' profits. In states like North Dakota, South Dakota, and Minnesota, a significant portion of soybeans is transported to ports for export. However, with reduced shipments, the surplus of soybeans is driving prices down, resulting in a 40% price drop since their peak in 2022.
While some soybeans can be redirected to crushing facilities for oil or ethanol production, many farms lack proximity to processing plants. Kyle Jore, an economist and farmer in Thief River Falls, Minnesota, mentioned that even if a trade agreement with China were reached immediately, logistical constraints due to the busy corn harvest would complicate transportation. “We’re probably just going to plan to sit on the soybeans and wait,” Jore said.
As farmers attempt to minimize losses, many are selling their soybeans to agricultural cooperatives at prices significantly lower than the market rate. Jore remarked, “The producers that sell are taking large losses, and they’re going to have to feel those losses.” Extension economist Loy warned about the broader implications of struggling farmers on rural economies, emphasizing that financial hardships for farms ripple through communities, potentially leading to business closures and population decline.
Jore likened the current economic climate to a sense of “déjà vu,” recalling the losses U.S. farmers experienced during the last trade war with China. A USDA report indicated that U.S. farmers lost $27 billion in agricultural exports between 2018 and 2019, with the market share of Chinese soybean imports for the U.S. falling to a 30-year low of 19%. In contrast, Brazil’s market share soared to 75%.
Despite some recovery through alternative export markets like the European Union, the long-term impacts of the trade war are evident, with farmers still struggling to regain lost market share. Todd Main, market development director at the Illinois Soybean Association, noted, “The takeaway from the data is that the U.S. lost about 20% of our market share, and it never came back.”
In response to the challenges, soybean producers are seeking innovative ways to build profitable infrastructures independent of exports to China. Initiatives like the Soy Innovation Center, established by the Illinois Soybean Association, aim to explore sustainable domestic uses for processed soy products. Meanwhile, the White House has suggested developing an agricultural subsidy program funded by tariff revenues.
While the first Trump administration implemented a $28 billion bailout for farmers, experts caution that while immediate economic losses can be compensated, regaining global market competitiveness is a much longer process. Wendong Zhang, an associate professor of applied economics and policy at Cornell University, remarked, “It will compensate for the immediate economic losses due to tariffs, but it doesn’t necessarily improve the long-term competitiveness of agriculture on the global stage.”
Farmers are not relying solely on bailouts but are instead advocating for stable trade relations. Main concluded, “What we really want is good relations with our trading partners. We want markets. We don’t want bailouts.”
