China has quietly got Trump by the soybeans

President Donald Trump's welcome for his summit with China’s Xi Jinping revealed a strategic move by China: leaving raw soybeans uncapped from tariff relief. While Chinese import of soybean products, including seed, flour, and processing by-products, was included, bulk soybeans, a core concern in U.S.-China farm tensions, remained untouched.

Soybeans, a significant agricultural export of the U.S., totaled $16.5 billion in 2020, ranking second after corn. China's insatiable demand for soybeans, largely due to limited arable land, makes them vulnerable to U.S.-China trade policy fluctuations. Prior to the first Trump trade war in 2018, American Soybean Association estimated 28% of U.S. soybean production was shipped to China.

The imposition of a 25% retaliatory tariff on U.S. soybeans by China in 2018 resulted in $9.4 billion in soybean losses for American farmers, costing Iowa and Illinois heavily. Given soybeans' role in U.S. farmers' revenue, they were a key focus in Trump's dealmaking with Beijing. He secured a deal with Xi in November, ensuring China's commitment to buying soybeans in 2026, 2027, and 2028.

The White House also announced China's commitment to buy $17 billion worth of agricultural products. However, China has alternatives, primarily Brazil. Brazil, having overtaken the U.S. as China's largest soybean supplier over a decade ago, continued to grow its market share, aided by cheaper prices. China's exclusion of commodity soybeans from the tariff relief package gives it a bargaining chip for future talks, according to Usha Haley, a professor at Wichita State University who studies Chinese trade strategy.

This strategy keeps China's soybean market uncertainty and high cost for American farmers, maintaining leverage in potential negotiations.