Once supply chains reorganize, they don't come back. American farmers are learning this lesson the hard way.
In 2024, China bought $12.6 billion in US soybeans. This year: $0.
The collapse exposes a fundamental misunderstanding of how modern trade works. While Washington treats soybeans as a bargaining chip, Beijing recognized them as what they actually are: an intermediate input in a tightly integrated agricultural-industrial supply chain. Crushing facilities process soybeans into animal feed and oil, sustaining livestock production and food security. Disrupt one node, and the entire system reorganizes—permanently.
Twenty years ago, China learned this lesson the hard way when it lost control of its soybean-crushing capacity in 2004. It spent two decades ensuring that vulnerability would never recur. The US is now discovering the same principle from the opposite side.
The economics of concentration
The math is unforgiving. China imports 100 million to 105 million tons of soybeans annually, accounting for 60% of global trade. US farmers cannot replicate that demand elsewhere. More than 90 countries export soybeans, but Brazil, the United States, and Argentina dominate. For China, a concentrated buyer, diversifying supply sources is straightforward. For dispersed US sellers, finding equivalent markets is impossible.
Trump's 2018 tariffs accelerated China's diversification, but the infrastructure was already in place. Chinese investment had financed the ports, railways, and logistics networks moving South American soybeans to Asian markets. When tariffs disrupted US-China trade, the supply chain rerouted. Beijing's retaliatory tariffs made American soybeans prohibitively expensive, and Chinese buyers did not return.
US farmers typically sell more than half their soybean exports between October and December, after Brazil's February-March harvest season ends. If Chinese buyers continue to be absent, the upcoming quarter will inflict severe damage.
The Argentina paradox
The contradictions in the US trade and tariff strategy crystallize in Argentina. Washington recently provided Buenos Aires with roughly $20 billion in financial aid to prevent it from drifting into China's orbit. Argentina responded by scrapping export taxes, instantly making its soybeans more competitive, and then sold them to China.
The episode reveals how the US treats trade as a bilateral issue, whereas in reality, it operates multilaterally.
Tariffs may protect final assembled goods and industries with high switching costs, but they backfire catastrophically for intermediate goods in flexible supply chains where buyers easily substitute suppliers. The current Team Trump US trade policy fails to recognize this essential distinction.
The post-Brexit parallel
The parallels with the United Kingdom's post-Brexit trade policy are striking. Both strategies feature grand rhetoric about sovereignty and leverage, yet they ignore how complex supply chains adapt to disruption. Both overestimate their indispensability and underestimate adjustment costs.
Jun Du, professor of economics at Aston University, frames the problem precisely: "Once supply chains reorganize, they never return to their previous form."
The lesson
In modern trade, control over supply-chain nodes matters more than control over raw materials.
China lost its crushing capacity in 2004 and restructured its entire import strategy to prevent recurrence. The United States is losing access to its largest export market because it failed to understand that supply chains, once reorganized, don't revert simply because tariffs change.
American farmers are paying the price for that miscalculation.
-Marc
