Trump to Ask China to Buy Soybeans. Why It’s a Hard Sell.

An old tractor rests next to a crop of soybeans that have turned brown as harvest for the crop nears in Centreville, Md., last month. (JIM WATSON/AFP via Getty Images)

Key Points

• President Trump plans to meet Chinese leader Xi Jinping to discuss soybean purchases and other issues.
• U.S. farmers are losing market share to Brazil and Argentina due to tariffs, prompting expectations of a new bailout package for the sector.
• Analysts note that expanded U.S. export controls complicate trade discussions. They say China views the 55% effective tariff rate as tolerable, if not ideal.

While the impact of tariffs has been muted so far in the broader economy, one group is feeling the pain acutely. Farmers are taking a serious hit, so much so that President Donald Trump said soybeans would be high on the agenda when he meets Chinese leader Xi Jinping at the end of the month in South Korea.

“The Soybean Farmers of our Country are being hurt because China is, for “negotiating” reasons only, not buying,” Trump said in a social media post on Wednesday. “We’ve made so much money on Tariffs, that we are going to take a small portion of that money, and help our Farmers. I WILL NEVER LET OUR FARMERS DOWN!…I’ll be meeting with President Xi, of China, in four weeks, and Soybeans will be a major topic of discussion.”

U.S. farmers have been losing share to Brazil and Argentina as a result of the tariffs. That hurts, especially because the U.S. has said it would allow Argentina to tap a $20 billion swap line and floated the possibility the U.S. would even buy the government’s debt. The administration is looking to support President Javier Milei, a Trump ally, ahead of a legislative election this month.

Trump’s promise to tap tariff revenue to help farmers, a reiteration of a statement he made last week, echoes a $32 billion bailout of the sector he provided in his first administration. Analysts expect the U.S. to allow farmers to tap something in the same ballpark through a Commodities Credit Corporation purchasing program because the sector is suffering on three fronts, all related to the administration’s policies.

Trump’s crackdown on immigration has made labor harder to find, tariffs on other countries’ goods are hindering U.S. farm exports, and prices for some farm equipment are rising, again as a result of tariffs.

If the bailout is much larger than was offered in the first term, analysts say it could indicate concern that farmers have permanently lost market share.

“There has been a little bit of frustration after the Argentina bailout [from farmers], but more generally this is an issue that is coming to the fore now as we move in to the fall harvest season and pressure is starting to ramp up,” says Owen Tedford, an analyst at Beacon Policy Advisors. “I would expect this to continue in the coming weeks, especially if the pattern doesn’t change in the lead up to the expected summit with Xi.”

Farmers had hoped that recent U.S.-China talks would yield promises by China to buy agricultural products, possibly in a deal reminiscent of the one Trump struck in his first term. That agreement included purchase commitments that Beijing ultimately didn’t fulfill.

Expectations for such a deal are fading now because Trump has said he won’t visit Xi Jinping in Beijing until next year. Instead, the two are expected to meet on the sidelines of the Asia Pacific Economic Cooperation summit in South Korea at the end of the month.

Analysts see little potential for major dealmaking at the forum. “It could be a placeholder for an eventual Trump visit to China, but they don’t have time to build much in terms of deliverables,” says Michael Hirson, head of China research for 22V Research.

There are other complications. One of Beijing’s priorities in discussions with the U.S., including over the agreement to sell TikTok, which is owned by China’s ByteDance, to a consortium of U.S. investors, has been easing the export restrictions that limit China’s ability to buy critical technology. But this week, the Commerce Department extended its so-called entity list and military end-user list to the subsidiaries of sanctioned Chinese companies, further restricting access.

A spokesman for China’s Ministry of Commerce urged the U.S. to “immediately correct its wrongful practice and stop the unreasonable suppression of Chinese companies.”

Hirson said that depending on how the change to the list is implemented, it could amount to a major expansion of the export restrictions. “It creates an important question mark [over further talks] and may implicate the TikTok deal, as well as the [flow] of rare earths.”

Analysts say that within China, many view the current effective tariff rate of 55% as not ideal, but tolerable, limiting how much Beijing is willing to give in on discussions for now. The expanded export controls may not offer the best backdrop for the U.S. to ask Beijing to help its farmers out.

Write to Reshma Kapadia at reshma.kapadia@barrons.com