Category: Business

The start of the harvest in September is usually when China, the world’s biggest importer of soybeans, puts in a flurry of orders to the farms of Illinois, Iowa, Minnesota, and Indiana.

This year, however, Chinese importers aren’t buying. In retaliation for President Donald Trump’s tariffs, Beijing has cut off Midwestern farmers from their largest and most lucrative overseas customer: China accounted for half — or $12.6 billion — of U.S. soybean exports last year.

For the first time since November 2018, China imported no soybeans from the U.S. in September, data from China’s General Administration of Customs showed Monday.

“We’re in uncharted territory in terms of a complete absence of Chinese buyers for the harvest that is currently coming in,” said Even Pay, director of agriculture research at Trivium China, a research firm based in Beijing.

For Beijing, halting U.S. soybean imports has been an easy and relatively cost-free way to pile pressure on Trump ahead of a planned meeting with Chinese leader Xi Jinping in South Korea later this month.

Trump, speaking to reporters on Air Force One last weekend, said he wanted China to return to its previous level of purchases and that he thought Beijing was ready to make a deal on soybeans.

But while American farmers lobby Trump to get them back into China, there isn’t similar pressure within China for the government to allow purchases from U.S. suppliers. That “gives Beijing a great deal of negotiating leverage,” Pay said.

On Tuesday, Trump took to social media to call China’s decision to not buy U.S. soybeans “an Economically Hostile Act” and said the U.S. was considering “terminating” buying cooking oil from China as retribution.

But Beijing has shrugged off Trump’s threats. Analysts say it is ready to extend the purchasing freeze for the rest of the year.

Here’s how China has turned its massive market for soy into a trade war weapon.

Why does China buy so many soybeans?

China consumes far more soybeans than any other country in the world, but it grows less than a fifth of what it needs — just enough to cover all the tofu and soy sauce used in Chinese cooking.

It buys everything else from abroad — importing more than the rest of the world combined — and the U.S. has traditionally been one of its top suppliers.

Those imported beans mostly feed huge numbers of pigs, chickens, and other livestock, as meat consumption by wealthier Chinese families has grown rapidly. Despite efforts to develop alternatives, soybeans accounted for 13% of animal feed in 2023.

The remaining imported soybeans mostly become cooking oil: soybean oil’s mild taste and ability to withstand high heats make it perfect for stir-fries. Chinese producers favor U.S. or Brazilian imports over more expensive homegrown soybeans.

For U.S. farmers, it’s hard to find a replacement for Chinese demand. “It’s just an enormous market,” said Phil Luck, director of the economics program at the Center for Strategic and International Studies (CSIS), a Washington-based think tank.

How has China curbed reliance on American farmers?

China has worked hard to curb its reliance on U.S. soy imports, especially after the trade conflict of Trump’s first term ended in 2020 when Beijing agreed to buy $200 billion in American products, including soybeans (although it bought far less than it promised.)

Beijing has since pushed Chinese farms to consolidate and expand domestic output. It has launched trial programs for previously banned genetically modified crops. And it is aiming to lower the ratio of soybeans in animal feed to 10% by 2030, down from 18% in 2017.

A Ministry of Agriculture report released in May said that these efforts meant import demand would steadily fall over the coming years.

But thanks to limited farming land and ballooning demand, China is still a long way from its goals to meet half of its soybean needs with domestic crops and will rely on imports for years to come, analysts said.

So who is supplying China instead?

Chinese analysts are blunt about their country’s growing preference to buy from anywhere but the U.S.

“From China’s perspective, the U.S. is an unpredictable supplier,” said Niu Haibin, director of the Center for Latin America Studies at Shanghai Institutes for International Studies.

Tariffs mean U.S. soybeans no longer have a price advantage and China has already identified alternative suppliers to fill the gap. “The longer we rely on alternative sources, the dimmer the outlook for U.S. soybean exports to China becomes,” Niu said.

Those suppliers include Argentina, Uruguay, and even Russia. But it is Brazil, the world’s largest soybean exporter, that has been the big winner from China’s U.S. embargo.

China would typically alternate between hemispheres, buying from Brazil during its March to June harvest season and then from the U.S. for the remainder of each year.

But this year, instead of switching to American farms, China kept placing orders from Brazil. It imported $4.7 billion in soybeans from the country in August and only $100 million worth from the U.S.

That continued in September, when China bought 7.2 million tons of soybeans from the South American country — 93% its total exports, according to Anec, Brazil’s national association of grain exporters.

China’s effort to secure Brazilian soybeans goes far beyond merely placing big orders.

Chinese state-owned companies have taken stakes in the major Brazilian ports of Paranaguá, Açu, and Santos. COFCO, China’s largest agricultural importer, has the exclusive rights to run a major new terminal at Santos that opened in March and will expand the port’s throughput by 15 million tons per year when it reaches full capacity in 2026.

And Beijing is still trying to lower barriers for Brazilian exporters to access its vast market. The two countries are working on plans to build a railway connecting Brazil to Peru’s Chancay port that could cut shipping times to Asia dramatically.

What does this mean for U.S.-China trade talks?

With plentiful supply from South America, China has been projecting confidence that it can cold-shoulder American farmers for as long as is necessary to reach a trade deal.

Beijing once worried that U.S. wouldn’t sell China its soybeans, but it is now the U.S. that is anxious for China to buy, declared one widely shared article published on social media app WeChat last week.

In response to Trump’s recent threat to retaliate by halting cooking oil trade — which Chinese analysts took to mean the U.S. stopping purchases of used oil that can be turned into biodiesel — the state-owned Global Times newspaper declared that “there is no shortage of buyers for China’s used cooking oil.”

That defiant tone is helped by China’s sizable stockpiles. Its soybean imports hit a record in May and were up 5.3% year-on-year for January to September to reach 95 million tons, according to China’s customs agency.

Beijing is in a position where it could hold out for months — possibly until new South American crops arrive in early 2026 — without needing to procure U.S. soybeans, said Pay, the Trivium analyst.

Trump’s focus on soybean purchases has only strengthened Beijing’s belief that this is an easy way to squeeze the U.S. with minimal costs at home.

In Beijing, “there’s definitely a sense that the U.S. is in chaos and there’s room for putting political pressure on targeted groups,” said Jack Zhang, director of the Trade War Lab at the University of Kansas.

It also gives Xi something to offer Trump in exchange for what China really wants.

“Part of the calculation,” Zhang said, “is that the U.S. will negotiate over these small but pressing concerns and relent on some of the larger structural stuff that China’s more worried about.” These include U.S. export controls on advanced computer chips.

But even if a deal is struck this month, it may be too late for U.S. farmers to make up for orders already lost.

“China’s in a pretty good position. We really want to resolve this. They don’t need to,” said Luck, the CSIS analyst. Even if China started placing orders the day after Xi and Trump meet, U.S. soybean farmers “still probably lost half of the season, so we’re on the clock here,” he said.

After seven rounds of grueling interviews, an offer for a recruiting job seemed within reach for David Daniels IV. Until a reference check that Daniels learned had involved wary discussions of his background in diversity, equity, and inclusion. The offer never came.

Having DEI experience on a resume can feel like a scarlet letter in an already difficult job market, said Daniels, who lives in New York and held roles at companies including yoga wear retailer Lululemon Athletica Inc. “There’s this sense of, if you did DEI, we don’t want to hire you,” he said. For Daniels and others like him, working in diversity made them hot commodities in corporate America just a few years ago. Now it’s a liability. Conservatives have lambasted diversity work as exclusionary, while President Donald Trump’s ire against what he has termed “illegal DEI” has spurred a retrenchment in many companies. Fearing lawsuits and the loss of government contracts, businesses quickly pivoted, downsizing or dismantling their diversity groups.

That left DEI professionals who lost their jobs stranded, competing for roles in a tight job market. Among the jobless population in the broader economy, about a quarter have been unemployed for a half-year or longer — the highest share since the mid-2010s, excluding the pandemic-era years. DEI specialists say they’re getting less interest from recruiters than they did several years ago and fewer interviews from companies. To bolster their chances, professionals have stripped the three letters from resumes and sought roles in adjacent departments such as in human resources, public affairs, and marketing. Others have weighed changing careers.

One job hunter is Josue Mendez in New York, who used to work in the diversity group at Ogilvy, an advertising agency owned by WPP PLC. In June, weeks after his team won an industry award for a leadership program for its Black male employees, he was among those let go. Since then, Mendez spends his days scouring job listings and attending job fairs.

A conversation with a recruiter was going well, he said, until Mendez mentioned his experience in diversity. “It suddenly went very cold,” Mendez recalled. “The second they see any previous work specifically in DEI, they want to stay away.” The call ended ahead of schedule. The recruiter later told Daniels he was out of the running for the job.

A handful of large corporations remain publicly committed to workplace diversity. Delta Air Lines Inc., Southwest Airlines Co. and Coca-Cola Co. have kept the DEI label on their websites. And others are now emphasizing veterans and disabled employees.

But there’s been a wave of reversals in the past year. Amazon.com Inc. halted some of its programs, McDonald’s Corp. stopped setting “representation goals” and Goldman Sachs Group Inc. ended a policy of only taking some companies public if they had diverse board members. Corporate fears around legal risks earlier this year overshadowed everything else, said Tynesia Boyea-Robinson, whose firm CapEQ advises companies on diversity and other social issues. “A lot of people basically looked to their legal counsel and asked: What is the way we can protect ourselves from being sued?” Job ads reflect the changed landscape. New postings for diversity roles have approximately halved this year to about 1,500 from 2019 levels, according to Revelio Labs, a firm that analyzes workforces. Postings had almost quadrupled to about 10,000 during the height of the DEI boom in 2022 compared with 2019.

Since losing her position at a firm advising clients on their diversity efforts late last year, Victoria Person in New Orleans has been attending networking events held by the local Chamber of Commerce to help find clients for her new consulting business while she searches for a job. The moment Person mentions her 15-year career working in diversity, people give an uncomfortable laugh, change the subject or look over her shoulder to find someone else to talk to, she said. “I see and feel people reel back,” Person said. “There’s a lot of fear around this, people don’t want to be associated with it.” Still, in spite of the current malaise, Person said she hopes that diversity programs will reemerge stronger and more inclusive, serving all demographics rather than specific groups.

Marie — who didn’t want her full named published because she fears online attacks from DEI critics — lost her role as a diversity manager, making $150,000, following Trump’s election win. Her job hunt initially yielded call backs and interviews. Now, responses have all but disappeared. Marie said she noticed some companies had posted the same diversity role multiple times over the course of months only to pull them later on. And in one interview, a chief diversity officer told her that the executive team wasn’t fully sold on workplace diversity, even though the company had posted a role. Given the scarcity of roles in diversity, Marie said she’s considering leaving the field. But returning to public education, her previous field, would mean risking cutting her income in half. In the meantime, she’s joined a group dedicated to professionals laid off from their diversity jobs. Its founder, Michael Streffery, who was let go from his job as director of DEI at Realtor.com earlier this year, says the group’s members have skills that are applicable to many other positions. “They’re systems thinkers, culture shapers, and crisis navigators,” he said.

Before leaving his job earlier this year, Carlos Ayala experienced a slide. Once a chief diversity and inclusion officer at an energy company, his title was changed and his role downgraded. He stayed at the company for several months to help “de-risk” the department he once ran. That meant watering down or removing diversity policies to help reduce legal risks.

Ayala quickly experienced firsthand the liability of having worked in DEI. He said he had applied for a role overseeing diversity efforts at a company that appeared, at least publicly, to be sticking with the strategy. Midway through his interviews, Ayala got an email from the recruiter who said the business was “reframing the role’’ and shifting it to a generalist human resources position. “I thought, God, that’s disappointing, they’ve been stringing me along,” said Ayala, whose based in the Chicago area. Weeks later, he’s still waiting to hear whether he got the job. Back in New York, Daniels is continuing his job search. He’s picked up some consulting work including a client in the United Kingdom, where the political backlash to diversity is less severe. He said he’s got more interviews after removing the DEI label from his online profile. In some interviews, Daniels said he’s repeatedly had to reassure hiring managers that he’s still comfortable working for a company even if it’s not focused on diversity. Despite the DEI retrenchment, Daniels is taking the long view. There’s an ebb and flow when it comes to social justice issues, he said. “America has always been this way.”

In 2022, Jake Clay started an Amazon delivery firm in Odessa, Texas, after hearing about the company’s program from a friend. He sank $75,000 into the business and earned more than $200,000 in the first year. An Air Force veteran, Clay, 50, felt like he’d joined an elite unit.

The feeling didn’t last. Before long, rising insurance and other costs began eating into his profit. One of Clay’s drivers was badly bitten by a dog and went on workers’ compensation for a year, while his annual vehicle insurance rates soared fivefold to almost $500,000. Clay mulled laying off all his managers and running the business on his own, figuring he would clear about $75,000. In the end, he decided it wasn’t worth it. He quit last month.

“I earned significantly less as I got more seasoned, which is the most upside-down business I’ve ever heard of,” Clay said. “Amazon wants a bunch of pawns and they keep a bunch of extra pawns on the bench to replace anyone who leaves.”

Clay said he rejected an offer to sign an exit contract with Amazon that would have paid him $75,000, but ban him from speaking publicly about the program.

Amazon.com Inc. launched its Delivery Service Partner program in 2018, offering aspiring entrepreneurs an opportunity to run their own businesses. The world’s biggest online retailer pledged to use its negotiating clout to help them lease vans and hire drivers. All they needed, the company said at the time, was can-do spirit and as little as $10,000 up front to earn as much as $300,000 (now $400,000) in yearly profit.

Today, some who answered the call fear the best days are behind them. While many prospered during the pandemic-era e-commerce boom, they say their profits are dwindling owing to rising costs for insurance and vehicle maintenance even as Amazon tightens performance metrics that determine how much they earn. Like Clay, several delivery owners told Bloomberg that making money has become so hard they’re getting out — a wrenching decision with the economy slowing and unemployment rising.

Amid the mounting discontent, Amazon recently announced a 20% hike to 12 cents for each package the firms deliver. It was the first such increase since the company launched the Delivery Service Partner program and an acknowledgment that inflation has driven up costs. But many contract delivery firms said the gesture was too little, too late. And because it doesn’t take effect until January, some saw it as a carrot to keep them working through the holidays when Amazon needs them most.

Still, they recognize they have little leverage because Amazon can simply replace them. Last month, during the annual Ignite conference for delivery service partners, the company touted its “Road to Ownership” program, which is designed to persuade drivers to start their own delivery companies. Many owners saw the presentation as a reminder that there are plenty of people eager to step in. And a number of newbies attended the Las Vegas conference, looking for tips on how to run their businesses.

Bloomberg interviewed 23 delivery partners who operate in 11 states around the U.S. Five said they quit the program because they were making less money each year, and several others are contemplating getting out. Four owners said they were happy with the program and that their income was growing. In online forums, delivery contractors have debated how to negotiate larger exit packages with Amazon and tried to establish how many have already quit. One chat room was set up specifically for contractors thinking of shuttering their firms and features more than 100 mostly anonymous members.

Most of the delivery partners interviewed, including those who quit and one who liked the program, spoke on condition of anonymity because they feared repercussions from Amazon.

“The anecdotes shared by a small number of DSPs don’t reflect the experience of the vast majority,” Amazon spokesperson Dannea DeLisser said in an emailed statement. “Interest in the program continues to grow as entrepreneurs recognize the opportunity to build their own businesses with Amazon’s support, and we’re proud of the thousands of DSPs that are doing well and making a positive impact in their communities.” Amazon has invested $16.7 billion in the program, which currently encompasses more than 4,400 firms — most of them in the U.S.

Inflationary pressure

Contract delivery firms have tangled with Amazon for years, often over what they consider unreasonable delivery targets that are monitored by artificial intelligence. Those concerns remain, but business owners trace their current woes to the inflationary environment and the company’s unwillingness to provide sufficient support at a time when Amazon is focused on cutting costs and boosting profits.

Tension between the company and its delivery businesses flared earlier this year when the company passed along big bills to repair aging delivery vans. Some contractors said they were getting hit with repair bills of up to $20,000 per vehicle that they couldn’t afford to pay. The delivery firms used an app called Pave to estimate damages based on photos of the vehicle, but Amazon instituted a more rigorous inspection process this year that resulted in repair bills as much as 10 times higher than the app estimate.

With delivery contractors balking, Amazon in September backpedaled and told them it would cover 20% of van repairs estimated in the Pave app going back to April and that it would send out revised invoices this month.

The delivery firms are also grappling with the rising cost of insurance. Typically when they start out, insurance rates are reasonable. But the longer they are in business, the more chance there is for accidents, dog bites, and other issues, which in turn push up the costs of covering their operation.

One owner who started an Amazon delivery business in 2019 blames skyrocketing premiums for slashing his annual profit from $400,000 to $150,000. He mostly employs young male drivers, whom insurers consider high-risk. His premiums soared after one driver was involved in a crash with serious injuries. When the case settled out of court for $1.4 million, the owner realized the risk wasn’t worth the reward.

He went to the Amazon delivery station one Saturday evening to tell them he’d cease operating the next day, leaving the company scrambling to reassign thousands of packages to other firms. “They weren’t happy,” he said.

Another delivery contractor who started when Amazon launched the program in 2018 said his yearly profits have been trending downward from about $200,000 to $160,000, which he expected to continue. His problems started when Amazon switched 10-hour delivery routes to begin later in the day at 11 a.m., meaning drivers made more deliveries in the dark when it’s harder to see street signs, addresses, and potential hazards like muddy puddles on dirt roads. That drove up his costs since he had to pay drivers overtime to complete routes and hire tow trucks to free vans stuck in mud. Amazon never increased his payments to reflect the increased costs associated with later deliveries.

Amazon said it conducted a financial performance of 648 delivery contractors last year and found that about 80% of them generated annual profits of at least $100,000. The company said their profits, on average, increased each year. The average business has been operating for five years and fewer than 10% of them quit the program, according to Amazon.

Some owners accept that running an Amazon delivery firm isn’t necessarily a long-term bet and prepare by diversifying. One delivery contractor in the Midwest started a plumbing franchise and encouraged his hardest-working delivery drivers to work there and learn a trade. Fred Vernon, 36, said starting an Amazon delivery business in 2019 in Houston has been life-changing. It’s hard work and he emphasizes driver safety to keep his insurance costs in line. Meanwhile, Vernon is using his proceeds to pay for law school.

“We’re doing very well and I’m grateful for the opportunity to pursue other goals,” he said.

Amazon delivery contractors quickly learn that bailing is no panacea. Unlike many small business owners, they have no hard assets to sell. They lease the vans, and the packages are stored in Amazon facilities. They could try to sell the business but it’s tied to a one-year contract with Amazon, which has veto power over any prospective buyer. So they can either quit with nothing or keep limping along with the knowledge that they could be replaced once the contract expires — perhaps with someone like Shannon Joseph.

A former driver, Joseph launched her own delivery business in Austin in 2022. She says her experience hauling packages has helped build rapport with her 92 employees. Joseph has heard the complaints from other delivery firms, but is confident she’ll keep making money and growing by outperforming the pack.

“I want to be one of the delivery partners who makes it for 10 years,” she said.