When a Trade War Becomes a Food Fight

U.S. agricultural exporters are rushing to find other buyers to replace the lost Chinese market. Some industries have had more success than others. The corn industry has responded most nimbly, aided by global growth in demand for corn. Cotton growers have likewise pivoted, taking advantage of broader trends to offshore textile manufacturers from China to Vietnam, Turkey, and Pakistan. Beef and sorghum exporters, by contrast, have been unable to recoup their losses in other markets.

Even industries that have successfully diversified face an uncertain future, however. Trade tensions between the United States and other trade partners-like India and the European Union-continue to ebb and flow, and U.S. exporters must navigate erratic geopolitical undercurrents. Some farmers may alternatively turn to domestic markets to sell excess goods. While total U.S. agricultural imports grew eight percent from January to July 2025, imports for some goods-namely fresh vegetables, vegetable oils, and live animals-fell by over 15 percent over the same period. These trends potentially create openings for beleaguered farmers, but they face a similarly uncertain policy environment and switching costs that may be passed onto consumers.

Soybean Farmers Face the Steepest Losses

Nowhere is this collapse in exports playing out more dramatically than in the U.S. soybean industry. The United States exports more soybeans by value than any other agricultural product-with exports exceeding $24 billion in 2024-and China has historically been its largest customer. But after China raised tariffs on U.S. soybeans to 34 percent in April 2025, its imports dropped to virtually zero and show no signs of reviving.

CSIS estimates that U.S. farmers will lose out on $5.7 billion worth of soybean exports to China through October 2025, relative to average exports from the past four years. They are on track to lose much more if sales remain stagnant in the peak harvesting months of October and November, when most sales typically occur in the heavily cyclical soy industry.

The 2018 U.S.-China soybean dispute provides a historical lesson on the costs of missed sales during the harvest season. That year also saw China impose tariffs on U.S. soybeans and a subsequent collapse in U.S. sales. Even though the dueling parties eventually reached a rapprochement in December 2018, the deal arrived too late to recoup lost sales during peak harvesting season-essentially erasing an entire year's worth of soybean exports.

The shortfall in total U.S. soybean exports in 2018 relative to 2015-2017 totaled $9.2 billion (per Trade Data Monitor data and CSIS calculations), roughly commensurate with an agricultural bailout package launched by the Trump administration in 2018. Pressure may grow for another such package if Washington and Beijing do not reach a deal quickly enough to avert deeper losses.

The biggest beneficiary of China's pivot from U.S. soy has been Brazil. Because Brazil's soy-growing and harvesting seasons are roughly inverse of the United States' own, China tends to buy Brazilian soybeans in the first half of the calendar year and U.S. soybeans in the second half. But the uncertainty around the U.S. market has motivated Chinese buyers to frontload their annual purchases from Brazil. As a result, since the beginning of 2025, Brazil exceeded its historical exports by an average of 10.7 percent per month. To accomplish this feat, Brazilian farmers are razing Amazonian rainforests to clear the ground for more soy crops.

Yet Brazil alone cannot fully compensate for China's pivot; Argentina is also stepping in to close this gap. Argentina's soybean industry is far smaller than Brazil's, exporting $2 billion in soybeans in 2024 relative to Brazil's $43 billion. But Argentina's soybean industry-aided by new tax exemptions-is rushing to capture unmet Chinese demand, and its total exports have grown by over 21 percent from January through August 2025 relative to the same period in 2024. This groundswell in Argentinian soybean exports is creating headwinds for the Trump administration's foreign policy priorities-namely, its $20 billion bailout for Buenos Aires, which is facing criticism from senators representing U.S. states with large soybean industries.

Beyond these dramatic year-over-year swings, U.S. soybean farmers face longer-term structural challenges to meeting demand in China. Under the banner of Xi Jinping's food security initiatives, Chinese soybean buyers have sought to diversify away from geopolitically risky import sources like the United States. Accordingly, the U.S. share of Chinese soybean imports fell from 49 percent in 2012 to 27 percent in 2024. Beijing's policy priorities and ongoing market unpredictability are likely to push this market share lower in the coming years.

Trade War Impacts Extend to Beef, Almonds, and Other Sectors

Soybean farmers are hardly the only industry to face Chinese retaliatory trade barriers; U.S. beef exporters have also fallen victim to the shifting policy landscape. In March 2025, China allowed the export licenses of hundreds of U.S. beef facilities to expire, effectively blocking them from selling to China. Since then, monthly U.S. beef exports to China have fallen by more than 90 percent. Most of these lost imports have been replaced by Australian beef exports, which have surged over the same period.

These lost sales have rippled across the American agricultural heartland. Texas, Kansas, and Nebraska each exported over $1 billion of beef products in 2023, and five states claimed beef as their top agricultural export that same year. Given that China is a top export market for these sellers, its retaliatory trade barriers are forcing farmers to rethink their business strategy.

U.S. almond growers have likewise felt the trade war's pinch, chiefly after China hiked tariffs on their imports to 35 percent in March 2025. These impacts have fallen most heavily on California, which produces nearly 80 percent of the global almond supply. Unlike the beef and soybean industries, however, almond growers have worked to insulate themselves from these shocks through a deliberate diversification strategy launched in 2018. This policy helped open new markets and spread risk across multiple buyers-most notably, India, which is now the largest market for U.S. almond exports. As a result of these efforts, China dropped from the third largest importer of U.S. almonds in 2018 to the tenth largest in the first seven months of 2025 (CSIS calculations based on Trade Data Monitor data).

Such a strategy illustrates a potential roadmap for how farmers can reduce their exposure to trade war shocks through market diversification. Yet even as farmers shift away from Chinese markets, they must still navigate simmering trade tensions elsewhere in the world. In the case of almonds, for instance, U.S. exporters are watching nervously as the Trump administration's 50 percent tariffs on India bite into bilateral trade flows. Should India retaliate against U.S. almond exports, the impact on U.S. farmers would be severe.

Rising Input Costs Are Squeezing Farmers' Margins

In addition to lost export markets, the U.S. agricultural sector is also facing acute pressure from rising input prices. Prices of common fertilizers have increased between 16 and 39 percent since January 2025. This is exacerbated by tariffs on imported fertilizer ingredients, such as those from Canada-the largest supplier of fertilizer to the United States-which were subjected to 10 percent tariffs beginning March 2025. Other inputs have similarly been affected: Farm labor costs have risen 47 percent since 2020 and are projected to rise further, while tractors and farm equipment manufactured in the European Union face similar threats of tariffs. These cost pressures are particularly acute for small and mid-sized farms, which were already at high risk of financial distress, often have limited liquidity, and less capacity to absorb shocks. Together, these factors foreshadow a challenging road ahead for the U.S. agricultural sector.