Trade, Tariffs, and Soybeans

Readers of Dollars & Sense will likely remember that Donald Trump argued—vociferously—during the recent presidential campaign that other countries were “ripping us off.” His evidence: the United States had a large and persistent trade deficit. This is sort of like saying the grocery store is ripping me off because it takes my money and only gives me food. Another part of Trump’s argument is that our trade deficit has hurt our manufacturing sector and tariffs will bring manufacturing back to the United States. Now, it is true that China has become the global leader in manufacturing, but the reality is more complicated. For example, China, with 17% of the global population, accounts for almost 28% of global manufacturing output—while the United States, with only 4.1% of global population, accounts for over 17% of global manufacturing output. 

During the campaign he argued that tariffs—a policy obsession of his since at least his 1987 ads in the New York Times, Boston Globe, and Washington Post—were a simple, easy fix to even the playing field. In the late 19080s, his targets then were Japan and Saudi Arabia.

More than a quarter century later, Trump’s enduring fixation on tariffs has brought us a dizzying flurry of taxes on an array of goods, often shifting from one day to another. Today his primary targets are China, Canada, and Mexico.

So, a natural but surprisingly overlooked question: How has this supposed panacea worked? 

Reality has come into conflict with theory. For the first eight months (through August) of 2025, the cumulative U.S. trade deficit in goods—Trump’s focus—is $1.790 trillion. (He ignores the U.S. trade surplus in services, which has averaged over $20 billion a month since early 2020.) In the same period in 2024, the cumulative goods trade deficit was $779 billion. The YTD 2025 goods trade deficit is running much higher than in 2024, despite the “magic” of the tariffs. Whether this will change over time remains to be seen, but Trump is on track to for a record year in terms of the U.S. goods trade deficit. 

Ok, but aren’t we collecting a lot of money in tariffs? In a Labor Day post, Trump claimed his tariffs had brought in $8 trillion in revenue (and that he had created “hundreds of thousands of jobs”). 

To put this fantasy number in perspective, the total U.S. GDP was about $29 trillion in 2024. So, no, we are not taking in $8 trillion—or even anywhere near that amount.

So far this year (year-to-date through August), tariffs have raised $194 billion, although net tariff revenue, which subtracts rebates to importers and excise taxes, will produce an amount about  85% of that number. That’s just a little over 2% of Trump’s fantasy number. 

But maybe we’re getting something after all?

Trump and his minions have consistently claimed that exporters, those countries who are “ripping us off,” are paying the tariffs. However, the actual data tell a different story. The import price index shows no decline in import prices, that is, the amount paid by importers to foreign exporters. If exporters were paying a significant share of the tariffs, the import price index would fall. The tariff is paid by the importer. Goldman Sachs’ most recent estimate for who pays the tariff is 37% to U.S. consumers, 51% to U.S. importers, and just 9% to foreign exporters. 

The Trump tariffs have different impacts on different goods. But one that has been in the news a lot, and where the impact is visible, are soybeans. Although soybeans have a variety of uses, livestock feed is the largest single use, including in China where much of the imported crop (and the small domestic production) are fed to hogs.

Soybeans offer a window into the real-world consequences of Trump’s trade war.

Until the early 2020s, agricultural exports have been a net surplus balance of trade, which means that the value of our agricultural exports has been more than the cost of our agricultural imports for the United States. California’s fruit and nut exports have been an important component of that surplus, but the largest crop by export value has been soybeans. The importance of soybean exports to China was codified in 2000, when one of the conditions for China’s admittance to the World Trade Organization was to open their market to U.S. soybean imports. Soybeans are the second-largest crop by acreage in the United States, and half of all soybeans are exported, in contrast to less than 20% of U.S. corn, which is the largest crop in the United States.

Soybeans have been the single largest U.S. export by value to China since 2008 and are among the top five globally traded items by value. But the global soybean market is comprised of only three big players: Brazil and the United States are the top two, accounting for over 80% of all of the soybeans that are produced and exported. China, the largest importer, buys about 60% of all the soybeans that are traded.

In response to Trump’s tariffs on Chinese imports, China imposed a 23% tariff (currently about $2 per bushel) on U.S. soybean imports, effectively ending the trade: in the July-September 2025 quarter, China bought almost no soybeans from the United States. (Though when Trump met with Chinese leader Xi Jinping last month, Jinping agreed to resume buying U.S. soybeans.) For the January-August YTD 2025 period, the United States sold only 218 million bushels of soybeans to China, down from 985 million bushels in the same period in 2024. In contrast, Brazil, with a record soybean harvest in the offing, sold almost 2.5 billion bushels of soybeans to China through August.

In addition, Argentina, a relatively small soybean exporter with exports that are less than 10% of Brazil’s share, recently has taken advantage of Trump’s tariff policies to become the third largest soybean exporter. Their buyer? China.

How will Trump deal with the problem of the loss of soybeans exports? One way (which Trump probably won’t do) is to act on his and his minions’ (incorrect) belief that exporters pay the tariff. Trump could take some of the tariff revenue and use it to pay the cost of China’s tariff on U.S. soybeans. What he is more likely to do is to give a bailout to the agrarian capitalists (aka “farmers”) of the Upper Midwest, just as he did during his first term, but on a larger scale.  But this time, the China/Brazil joint “Soy China” plan is providing the transportation and port infrastructure to link Brazil and China over the longer term. 

Markets once lost are difficult to regain. One thing we can be sure of: Trump is certainly upending global trade.  

Bill Barclay is a member of the Chicago Political Economy Group and a member of the Ventura County, Calif. chapter of Democratic Socialists of America (DSA).