European Union countries approved a set of retaliatory levies on the United States on Wednesday in response to President Donald Trump’s sweeping tariffs on America’s trade partners.
The tit for tat, which goes into force on April 15, comes as China also retaliated against Trump’s tariffs this week. The unfolding tariff spat has destabilised global markets and seen stocks fall across the board.
Trump’s latest tariffs put a 20 percent levy on all EU goods. The tariff rate is 104 percent for Chinese goods.
The EU’s actions will target US aluminium and steel products, as well as American agricultural imports – key among them being soya beans – though these tariffs will likely be rolled out in a phased manner.
One of America’s biggest imports globally, could soya prove to be Washington’s Achilles heel that trading partners, including the EU and China, use to hit back effectively?
Here’s what to know about what a soya bean trade war could mean – and why it could be a big deal for the US, economically and politically:
Why is soya so important for the US?
Soya, in the form of whole beans, animal feed, or oil, is a cornerstone of the US agricultural industry and represents one of America’s biggest agricultural revenue earners.
It accounts for about 0.6 percent of GDP. The US has more than 500,000 soya bean producers, according to the Department of Agriculture’s Census of Agriculture. That includes at least 223,000 full-time jobs supported by the soya bean industry, according to a 2023 report for the National Oilseed Processors Association and the United Soybean Board.
The industry is worth $124bn in the US – that’s more than the entire economy of Kenya or Bulgaria.
Although local demand for soya in the US is growing, exports form the basis of the crop’s success. The US is presently the second-largest exporter of soya beans globally, selling more than half its yield to about 80 countries.
Who does the US export soya beans to?
Soya beans contributed more than $27bn of US annual exports in 2023, according to data from the Observatory of Economic Complexity (OEC), an open-source data visualisation platform.
That’s more than any other agricultural export.
China, which imports $15bn of US soya beans, is by far the most important market, followed by the EU – and especially Germany, Spain and the Netherlands, which buy about $2bn worth of the oilseed.
Yet, both China and the EU are now at the heart of a global pushback against Trump’s tariffs. They were both on the “worst offender” list of countries hit by a barrage of tariff hikes announced by Trump last week. The list included countries that Washington claimed were unfairly taxing US goods in their countries.
Trump slapped the EU with a 20 percent surcharge, apart from 25 percent levies on steel and aluminum, which form a key part of the bloc’s exports to the US.
China, in total, now faces a 104 percent tariff on all its US exports as of Wednesday.
Will the EU and China retaliate with tariffs on soya?
Both entities appear to be targeting US soya, a soft spot for Washington, considering the importance of their markets to American farmers.
The EU earlier promised to target US goods worth up to €26 billion ($28bn) in retaliatory tariffs. A draft of the full list was leaked earlier but has not officially been released.
On Wednesday, the bloc voted on a surcharge of up to 25 percent on the list of targeted goods. A first set of tariffs will be enforced from April 15.
While those tariffs are expected to be enforced in phases, one of the products on the EU’s list is soya.
Meanwhile, US soya exports to China, its biggest market, are also facing a battering. China had earlier honed in on US food products, slapping a 15 percent duty on commodities like chicken, wheat and corn, while imposing a 10 percent levy on soya beans, meat and other farm exports.
On Saturday, China placed an additional 34 percent on all US goods, bringing the surcharge on soya, in particular, to 44 percent. A further 50 percent hike on all US goods will take effect on Thursday, Beijing has announced.
That means American soya beans will now face 94 percent tariffs in China.
Experts say China can afford to gamble with soya because it has increasingly turned to Brazil for its soya imports since 2017 when the first trade war began during Trump’s first administration.
US soya exports to China have fallen in the time since, while Brazil now holds more than half of the market share. In 2024, Brazil exported $36.6bn worth of soya to China while the United States exported $12.1bn worth of soya.
How are US soya farmers reacting?
https://x.com/ASA_soya beans/status/1909613301564112985
American soya farmers have urged Trump to remove tariffs on China, the EU, and other top markets like Mexico. Most have emphasised China’s importance to US farmers.
“China bought 52 percent of our (soya bean) exports in 2024,” the American Soybean Association’s chief economist, Scott Gerlt, told the AFP news agency. Given the size of its purchases, China cannot easily be replaced, he added.
Some farmers say many won’t be able to hold out for too long if the trade spat continues, as their produce would become too expensive to be competitive on the global market.
“If this trade war lasts beyond the fall, you’re going to see farmers go out of business,” soya bean farmer David Walton told US news channel ABC.
What could be the political implications?
The war on soya, and indeed, the tit-for-tat tariff row, could have deep political implications.
So far, Trump has issued the policies as executive decrees, denying Congress the right to weigh in on the matter.
But Republican Congressman Don Bacon, Republican Senator Chuck Grassley and Democrat Senator Maria Cantwell are preparing to introduce legislation that would force Trump to notify Congress of any new tariffs, with its enforcement subject to the House’s approval, according to reporting by US publications Politico and Axios. The chances of the bill passing through are slim, however, since Republicans dominate the House and Senate.
Still, whatever happens in Congress, the political consequences might be felt beyond Capitol Hill, too.
Nearly all of the American soya bean exports to the EU come from Louisiana alone, the home state of Republican House Speaker Mike Johnson. The politician has nonetheless spoken in favour of the tariff hikes.
In a press statement last week, Johnson said Americans should “trust the president’s instinct on the economy”.
“It may be rocky in the beginning, but I think in the end it will make sense for all Americans, it will help all Americans,” he said.
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