Insight Focus
The latest Supreme Court ruling has upended US soybean tariffs. China’s purchases slowed, boosting US FOB prices over Brazil and cooling overall exports after October 2025. USDA projects rising domestic biofuel demand will drive soybean use, with higher plantings and crush growth over the next decade.
Supreme Court Ruling Reshapes US Tariff Strategy
As geopolitics and tariffs continue to add uncertainty to the soybean market, US policymakers are moving to reduce reliance on foreign demand by ramping up domestic biofuel use of soybeans.
A February 20, 2026 ruling by the US Supreme Court upended President Trump’s year-old tariff strategy and raised questions about US-China soybean trade. The court ruled that the 1977 International Emergency Economic Powers Act (IEEPA) did not grant the legal authority claimed by the President for many of the tariffs levied on trading partners in 2025. The ruling struck down fentanyl-related tariffs on Chinese goods that had prompted China’s across-the-board retaliatory tariffs of 10% on US goods, including soybeans.
US tariffs did not disappear, however. Immediately after the ruling, President Trump signed an executive order imposing a global tariff under the authority of Section 124 of the Trade Act of 1974. The statute permits the tariffs to remain in place for up to 150 days before Congressional action becomes necessary. The new tariff was set at 15% on February 21.
Also on February 20, the White House announced that President Trump would visit China from March 31 to April 2 for talks with his counterpart, Xi Jinping. President Trump promised to press Xi for additional purchases of US soybeans and other agricultural products, which will be on the agenda.
Market Questions Grow Over US–China Soybean Trade
The immediate impact of this news on soybean markets was unclear. Some observers interpreted the tariff ruling as weakening US leverage in trade negotiations with China. With the US in a weaker position, some analysts reasoned that China might back out of its soybean purchase commitments that had sparked the most recent soybean market rally.
China’s extra 10% tariff on all US goods is the measure that makes Chinese market-based purchases of US soybeans uncompetitive compared with Brazilian and Argentine soybeans. That tariff had been imposed in retaliation for the US fentanyl-related tariffs as part of the October trade truce. There was no indication whether the Supreme Court’s nullification of the fentanyl tariffs would prompt China to suspend its retaliatory tariff.
China completed its initial purchase commitment of 12 million tonnes of US soybeans made in October, but more than 40% of those purchases have not yet been shipped. Cancellations of sales and/or the evaporation of an additional 8 million tonnes of Chinese purchases hinted at by Trump in early February would undercut the rally that boosted Chicago’s March 2026 futures price from USD 10.60/bushel in early February to a peak of USD 11.41 on February 19—close to the highs previously reached in November 2025. US FOB prices were at a substantial premium to Brazilian prices during mid-February.
The pace of US soybean sales to China had slowed by late January. Sales to non-China destinations also slowed after their October peak, as higher US prices cooled demand.
Source: USDA
USDA Outlook Signals Growing Role of Biofuels in Soybean Use
Meanwhile, exports to China were largely in the background at USDA’s annual Outlook Forum held February 19–20. Several sessions featured speakers stressing the importance of expanding biofuel use to increase domestic demand for grains and oilseeds. Discussions on agricultural trade policy emphasised trade promotion activities and negotiations to dismantle foreign non-tariff barriers as strategies to create new foreign markets, with only passing mentions of China.
At the Forum, the USDA released a set of new forecasts and projections that included a shift from exports to domestic consumption as the primary driver of future demand for US soybean oil and soybeans. The USDA’s first supply and demand estimates for the 2026/27 marketing year predicted a 4-million-acre increase in soybean planted area and a 188-million-bushel increase in soybean production to 4.45 billion bushels.
While most US crop producers are struggling with low returns, USDA analysts cited stronger profitability for soybeans compared with other crops—including a relatively high soybean-to-corn price ratio—as the reason for the projected increase in soybean area.
The increase in prospective soybean plantings in 2026/27 would partially reverse a 6.1-million-acre drop in soybean acreage last year. It would also add to plentiful world supplies, with Brazil currently harvesting what is projected to be a record-large soybean crop.
The USDA’s long-term “baseline” projections issued ahead of the Forum show a strong increase in biofuel use of US soybean oil, rising from 11.9 billion pounds in 2024/25 to 15.5 billion pounds in 2026/27 and 18.03 billion pounds by the end of the projection period in 2035/36. The projections indicate that biofuel will be the largest use of soybean oil over the next decade.
Source: USDA
For US soybeans, the USDA projects growth in domestic crush attributed to federal and state-level mandates for blending renewable fuels for automobiles, aircraft, and ocean-going vessels. Projections show crush rising steadily from 2.57 billion bushels in 2025/26 to 2.655 billion bushels in 2026/27 and 2.8 billion bushels in 2035/36.
The USDA’s estimates indicate that domestic crush comprised 51% of US soybean use in 2022/23, but projections show that percentage will rise to 59%–60% of use from 2025/26 to 2035/36 as crush grows to become the predominant use over the next decade.
US soybean exports dropped to 1.575 billion bushels in 2025/26, the lowest since 2012/13. USDA projects a rebound in exports to 1.7 billion bushels in 2026/27 as demand from non-China sources picks up. USDA also projects continued growth in exports to 1.84 billion bushels by 2035/36.
Historical data show that US soybean exports exceeded domestic crush in many years from 2014 to 2020, but the new projections indicate that the share of US soybeans going to the export market will fall to an estimated 37% in 2025/26 and 39% in 2035/36.
Source: USDA
