Minnesota soybean farmers fear lasting scars from Trump’s trade war with China

TRACY, MINN. – Months into a trade war with China, steel grain bins across rural Minnesota sit plump with soybeans without a market, and farmers are nervously eyeing balance sheets.

On Wednesday, news broke across an ocean that, ahead of a planned meeting between President Donald Trump and China’s president, Xi Jinping, China had purchased three cargoes of U.S. soybeans, ending a monthslong embargo. The news was welcome. But more would be needed.

In southwestern Minnesota, including Tracy, local economies follow the soybean markets. In good years, farmers use profits to buy pickups from area car dealerships and make down payments on land. In lean years, they tighten belts.

Trump’s trade war with China could not have come at a worse time. It’s the lean years in the soybean markets, and up until this year, every third row went to China.

So, farmers argue, they are losing money on every acre of soybeans they plant because of a crisis not directly of their own making.

And the crisis affects the entire state. Soybeans are Minnesota’s largest export commodity — generating $2.4 billion annually. Now farmers fear they are seeing the start of a permanent market shift that will change the soybean industry.

Farm country and state officials are all watching closely this week. Trump meets Thursday with Xi, and a blueprint for a possible deal floated Sunday evening sent soybean markets 20 cents higher overnight.

“I’ll be honest, I kind of trusted him that he would be able to work out these trade deals way sooner,” said Jay Fultz, a Lyon County farmer who finished his harvest earlier this month.

Behind the current crisis looms what happened to wheat farmers a generation ago when President Jimmy Carter’s embargo of the Soviet Union in 1980 permanently curtailed wheat acres in the Upper Midwest.

There was never that one big customer again.

That’s what soybean farmers are worried about now — that while new markets will be found, they won’t add up to the heft of China.

In 2023, Minnesota exported nearly 4 million metric tons of soybean meal, which is largely used to feed hogs. Many grain analysts are wondering, where does that go without China?

It wasn’t many years ago that opening up trade with China was seen as the antidote to soybean farmers with fresh memories of the devastating 1980s, when crop farmers went bankrupt at rates unseen since the Great Depression.

When Gov. Arne Carlson went to China on a trade mission in 1998, he brought along a soybean farmer, Don Nickel.

His son Audi Nickel now farms and teaches agriculture at the high school in Mountain Lake.

“[Dad] was frustrated just like anybody else and realized, ‘Hey, this is a way for me to make an impact on every soybean farmer — not just in southwestern Minnesota, but all over the country,’ ” Nickel said.

Nickel said his father, who died in 2022, watched with dismay during Trump’s first term when a trade war with China cost American soybean farmers an estimated $20 billion in profits.

Audi Nickel picked up a teaching job to generate extra income to buttress against a farm failure.

“If I hit [like the] ’80s financially, I’d need to fall back on something,” he said.

As of late October, hope glimmers on the horizon for a resolution to the Chinese soybean embargo.

Currently, soybeans are trading at over $10 a bushel — a decent price that suggests the prospect of a trade deal is baked into traders’ expectations, Roberts said.

But the stagnant markets have already caused distress. This is the second year in a row farmers are expected to plant soybeans at a loss when factoring in their costs, which include fertilizer and seed.

Benya Kraus, president of the Southern Minnesota Initiative Foundation, said she’s witnessed on her family farm outside Waseca a need to cut back on expenses. Car dealerships, fertilizer sellers, even food shelves needing donations are all feeling reverberations.

“When our farmers are hurting and need to tighten their financial wallet, the whole rural community feels it,” Kraus said.

There’s some hope for domestic use of soybeans: biofuels.

“There’s no place else to go in the world to replace China,” said John Griffith, executive vice president of ag business at CHS.

Blending all diesel used on American highways with 2% soybean-based biodiesel could fill the gap left by China, Griffith added.

Even with export customers beyond China, re-engineering shipping lanes away from the Pacific to the Gulf of Mexico or the Twin Ports in Duluth is expensive. And South America’s increased production in recent years has led to a global glut of soybeans — in short, domestic markets are needed.

For a generation of farmers, the specter of China meant a growing, almost limitless market for soybeans.

Ed Usset, a grain marketing economist at the University of Minnesota, puts a graph up on the first day of class of China’s soybean imports. In Minnesota fashion, he says it resembles a “hockey-stick.”

“Soybeans are a mirror of growth in the Chinese economy,” Usset said. “As the [Chinese middle class] had more money, they changed their diets.”

In other words, they wanted pork. And to feed those hogs, they needed feed. American soybean producers stepped up to fill those orders.

“There was tremendous growth,” Usset said.

In the early 2000s, soybeans even eclipsed corn briefly for number of acres planted across Minnesota. By 2024, 7.4 million acres were planted.

But, just like the first trade war, the Chinese embargo has raised existential questions about soybeans: Minnesota grows more than the U.S. uses domestically. Should it?

“We can’t utilize all the soybeans produced in this country,” said Pauline Van Nurden, an economist with the University of Minnesota Extension. She added that building out a partner to take China’s place would take years.

Back in Tracy, Fultz’s father, Dennis, is a lifelong Republican who voted for Kamala Harris last November. He says Trump undid decades of goodwill with China.

But Dennis’ son, Jay, who voted for Trump, retains faith in the president’s reputation as a dealmaker.

“We still have three more years for him to kind of figure things out,” Jay Fultz said. “I think there’ll be brighter times ahead.”

Even farmers who don’t share Fultz’s optimism about the Trump administration agree on one point: They will plant soybeans again in the spring. It’s what they’ve always done.