Geopolitical Risks in Agricultural Commodities: Trump's U.S.-China Trade Conflict and Its Impact on Soybean and Cooking Oil Markets

The U.S.-China trade conflict, reignited under President Donald Trump's 2025 administration, has intensified geopolitical risks in agricultural commodity markets, particularly for soybeans and cooking oil. Tariffs, retaliatory measures, and strategic trade threats have disrupted global supply chains, created price volatility, and forced producers and consumers to adapt to a rapidly shifting landscape. This analysis examines the mechanisms through which these tensions are reshaping markets and offers insights for investors navigating this complex environment.

Soybean Markets: A Precipice of Collapse

The U.S. soybean industry has borne the brunt of Trump's trade policies. China, once the largest buyer of American soybeans, reduced its purchases to 18% of total imports by January–November 2024, down from 40% in 2016American soybean farmers face financial crisis as ...^[1]. This collapse was driven by a cumulative 135% tariff on U.S. soybean exports to China, prompting Beijing to pivot to cheaper alternatives from Brazil and ArgentinaUS-China Trade War Tariffs: An Up-to-Date Chart^[4]. The American Soybean Association estimates that U.S. farmers lost $27 billion during the first trade war, with 71% of the losses attributed to soybeansAgricultural products: How Trump's trade war with ...^[2].

The financial strain on U.S. farmers is compounded by rising input costs for fertilizers and equipment, as well as a lack of long-term market stabilityTrump's Trade War With China Catches the World in Its Crossfire^[3]. By 2025, U.S. soybean exports to China had dwindled to 21% of China's total imports, with Brazil dominating the market at 70%Agricultural products: How Trump's trade war with ...^[2]. This structural realignment has left American farmers scrambling for alternative buyers, though countries like Japan and Indonesia cannot replicate China's massive demandAmerican soybean farmers face financial crisis as ...^[1].

Cooking Oil Markets: A New Front in the Trade War

The cooking oil sector has emerged as a flashpoint in the Trump-China trade conflict. In October 2025, Trump openly threatened to terminate trade ties with China in cooking oil, citing Beijing's refusal to purchase U.S. soybeans as retaliationAgricultural products: How Trump's trade war with ...^[2]. This rhetoric has introduced significant uncertainty into global markets, with companies re-evaluating supply chains to avoid double tariffsThe global supply chain's reaction to the Trump tariffs: ...^[5].

The ripple effects are evident in production and pricing. China's retaliatory tariffs on U.S. goods, including a 15% levy on soybeans, have made American oil unviable for Chinese refinersThe global supply chain's reaction to the Trump tariffs: ...^[5]. Meanwhile, global edible oil prices surged in October 2025 due to a confluence of factors: geopolitical tensions, supply chain disruptions, and climate-related production shocks in Argentina and IndonesiaAgricultural products: How Trump's trade war with ...^[2]. The International Energy Agency (IEA) revised its 2025 oil demand forecast downward by 1.2 million barrels per day, with 60% of the revision linked to Trump's trade policiesUS-China Trade War Tariffs: An Up-to-Date Chart^[4].

Supply Chain Reconfiguration and Cost Inflation

The trade war has forced businesses to adopt "China plus one" strategies, diversifying suppliers to countries like Vietnam, India, and MexicoThe global supply chain's reaction to the Trump tariffs: ...^[5]. However, reshoring production remains prohibitively expensive for most firms, with over 60% of companies preferring low-tariff countries over domestic relocationUS-China Trade War Tariffs: An Up-to-Date Chart^[4]. This has led to inventory stockpiling and increased shipping costs, pushing consumer prices higherThe global supply chain's reaction to the Trump tariffs: ...^[5].

For example, U.S. biofuel producers, which rely on soybean oil for half of their output, face challenges finding alternative marketsThe global supply chain's reaction to the Trump tariffs: ...^[5]. The shift in crude oil sourcing-China now imports 99% of its crude from non-U.S. sources like Saudi Arabia and Russia-has further complicated global trade dynamicsTrump's Trade War With China Catches the World in Its Crossfire^[3].

Investment Implications and Risk Mitigation

Investors must contend with three key risks:
1. Price Volatility: Soybean and cooking oil prices are likely to remain volatile due to trade uncertainties and supply chain reconfigurations.
2. Currency Fluctuations: The yuan's decline and the dollar's surge against the peso and peso have added layers of complexity to hedging strategiesTrump's Trade War With China Catches the World in Its Crossfire^[3].
3. Policy Uncertainty: Trump's unpredictable trade policies could escalate tensions, with potential retaliatory measures from the EU and ChinaUS-China Trade War Tariffs: An Up-to-Date Chart^[4].

To mitigate these risks, investors should consider:
- Diversifying portfolios across geographies and commodities to reduce exposure to U.S.-China trade shocks.
- Hedging against currency and commodity price swings using futures and options.
- Monitoring policy developments closely, particularly Trump's proposed 100% tariffs on Chinese goods and potential retaliatory actions.

Conclusion

The Trump-led U.S.-China trade conflict has created a perfect storm for agricultural commodities, with soybeans and cooking oil markets at the epicenter. While U.S. farmers and producers face immediate financial strain, the broader implications for global supply chains and consumer prices are profound. Investors must remain agile, leveraging data-driven strategies to navigate this volatile landscape.