On Thursday, the Financial Times reported that the Trump administration is exploring the use of tariff revenue to fund an economic aid program for U.S. farmers. As the harvest begins, record-high yields, the lack of a U.S.-China trade deal, and rising input costs, partially due to tariffs, have set up farmers for projected losses.

A key source of concern for farmers has been that China continues to withhold new crop export orders for U.S. soybeans in response to elevated duty rates and to maintain leverage in ongoing U.S.-China trade negotiations. China has historically been the largest destination for U.S. soybeans, importing ~25% of total U.S. soybean production.

In response to President Trump’s tariffs, China imposed 20% retaliatory tariffs on U.S. soybean imports, bringing the total duty rate to 34%, making U.S. soybeans more expensive than South American product. Most U.S. soybeans are shipped to China during September to February, before the Brazil harvest comes to market, with ~15% of annual sales to China typically booked by now.

However, this year China has yet to place a single order, with the country importing record volumes of Brazilian soybeans over April–August in an effort to circumvent the need for American beans.

The situation looks eerily similar to the predicament faced by U.S. soybean farmers in the 2018-2020 trade war, when soybeans accounted for ~70% of agricultural export losses. With the soybean harvest underway, a solution is rapidly needed, whether it be in the form of a bailout or a deal with China.