The Resurgence of U.S.-China Soybean Trade and Its Implications for Agricultural Commodities

The U.S.-China soybean trade, once a casualty of the 2018 trade war, has shown tentative signs of revival in 2025, driven by a fragile truce in bilateral tensions and China's urgent need to fill a looming supply gap. However, this resurgence raises critical questions about the durability of the recovery, the role of alternative suppliers, and the broader strategic positioning of both nations in the global agricultural sector.

A Partial Rebound, but Not a Full Recovery

China's soybean imports from the U.S. in 2025 totaled 18 million metric tons, a 33% decline from 2024 and the lowest level since 2018. While this marks a partial restoration of trade, it falls short of pre-tariff levels. Under the terms of the November 2025 agreement, China has committed to purchasing 25 million metric tons annually through 2028, a figure still 14% below the five-year average from 2020–2024. This shortfall reflects China's ongoing diversification of suppliers, particularly to Brazil and Argentina, which have capitalized on the U.S. absence. Brazil's soybean exports to China hit 79 million metric tons between January and October 2025, while Argentina's surged 65% year-on-year. However, South American producers face capacity constraints, with limited stockpiles to sustain elevated exports beyond the current crop cycle.

China's soybean demand remains robust, projected at 108 million metric tons for the 2025/26 marketing year. Even with Brazil and Argentina supplying most of its needs through late 2025, a 19.2 million metric ton gap is expected before the next South American harvest in early 2026. This creates a window of opportunity for U.S. exporters, but the U.S. soybean industry's heavy reliance on China-accounting for 53% of its exports-leaves it vulnerable to policy shifts and geopolitical volatility. Analysts warn that without diversification, U.S. farmers remain exposed to sudden disruptions, as seen during the 2018–2020 trade war.

Strategic Positioning: U.S. and China in a Shifting Global Landscape

The U.S. and China are recalibrating their agricultural strategies amid a broader shift in global trade dynamics. For the U.S., the 2025 trade agreement with China is part of a broader effort to stabilize export markets after years of uncertainty. The U.S. agricultural trade deficit is projected to widen to $42.5 billion in 2025, driven by rising imports of horticultural products and competition from Brazil in soybeans. To mitigate this, U.S. producers are increasingly targeting Southeast Asian markets like Indonesia and Vietnam, where demand for soybeans, cotton, and processed foods is growing.

China, meanwhile, is doubling down on food security and technological self-reliance. The 2025 No. 1 Central Document emphasizes biotechnology, digital agriculture, and green supply chains, aiming to boost grain production by 50 million tonnes by 2030. Its expanding network of free trade agreements (FTAs)-including the Regional Comprehensive Economic Partnership (RCEP)-has facilitated access to tropical fruits, wine, and other agricultural products while reducing reliance on any single market. These FTAs also incorporate provisions for digital trade and sustainability, aligning with China's long-term economic modernization goals.

Broader Implications for Agricultural Commodities

The U.S.-China soybean deal is part of a larger pattern of geopolitical normalization, but its implications extend beyond soybeans. The 2025 trade framework includes reduced tariffs on U.S. corn, wheat, pork, and dairy products, signaling a temporary easing of tensions. However, unresolved issues-such as non-tariff barriers and certification disputes-highlight the fragility of this détente. For global markets, this creates a dual challenge: short-term stability from reduced tariffs versus long-term uncertainty over the durability of the agreement.

China's strategic pivot to alternative suppliers also has knock-on effects for other commodities. For example, its increased soybean imports from Brazil have depressed global prices, squeezing domestic producers in both countries. Similarly, its investments in rare earth processing and green technologies-critical for agriculture and energy sectors-underscore its ambition to dominate value chains beyond raw commodities.

Investment Considerations

For investors, the U.S.-China soybean trade resurgence offers both opportunities and risks. In the short term, the 2025 agreement could boost U.S. agricultural exports and stabilize prices for soybean-dependent industries like livestock feed. However, the reliance on China's commitments and the competition from Brazil and Argentina suggest that gains may be temporary. Diversification into emerging markets and investments in sustainable practices-such as precision agriculture and supply chain resilience-will be critical for long-term success.

On the geopolitical front, the U.S. and China's agricultural strategies reflect broader trends in global trade. The U.S. is seeking to balance market access with supply chain security, while China is leveraging FTAs and technological innovation to reduce vulnerabilities. For investors, navigating this landscape requires a nuanced understanding of both bilateral dynamics and the structural shifts reshaping global agriculture.