Structural Shift: Trade Policy and Geopolitics as Primary Market Drivers

2025 was a historic and tumultuous year for global trade relations, with the US taking centre stage with a historic pivot in its global trade policy, shifting from targeted sectoral protections to a broad-based, aggressive use of tariffs as a tool of both economic security and foreign policy. The change in the US stance on global trade coincided with the commencement of Donald Trump’s second term as president of the US. This new aggressive power oriented stance to economic and foreign policy is a stark shift away from the rules-based order that presided over global politics and trade for the past decades.

The broad timeline of the 2025 tariffs strategy is as follows:

• January – March 2025: Immediately upon taking office, the administration focused on the US's three largest trading partners: Canada, Mexico, and China. Global import taxes on steel and aluminum were heightened to 25%, expanding upon the previous 2018 duties and signaling a return to broad-based protectionism.
• April 2025: On April 2, dubbed Liberation Day, the administration unveiled sweeping universal baseline tariffs on nearly every country in the world. Separately, 25% auto tariffs began, causing significant uncertainty within the US auto industry and bringing more retaliation from trading partners like Canada. Furthermore, the trade war between the US and China reached new heights as tit-for-tat levies escalated to 145% and 125%, respectively.
• May – July 2025: The administration hiked steel and aluminum taxes further to a punishing 50%. While framework deals were discussed with countries like the UK, China and Vietnam, trade wars were notably escalated with Brazil and India. During this period, the first major legal challenges to the use of the International Emergency Economic Powers Act (IEEPA) gained traction in federal courts.
• August 2025: Heightened tariffs on more than 60 countries and the European Union (EU) officially kicked in, with most of these rates originating from April’s Liberation Day announcement. Canada’s rates were hiked to 35%, while Brazil and India were hit with 50% levies. This month also saw the end of the "de minimis" rule, stripping low-value imports (USD 800 threshold) of their duty-free status.
• September – December 2025: The tariff fight moved to the Supreme Court as justices heard oral arguments regarding the president's authority to impose such sweeping levies. While new 25% tariffs on furniture took effect, the administration began to selectively lower or scrap duties on high-pressure goods like beef and fruit to mitigate rising domestic price pressures.

The tariffs imposed by the US have introduced significant uncertainty into the global trade landscape while structurally altering global trade flows and relations. In essence, the tariffs imposed by the US have functioned as a geopolitical wedge, forcing nations to choose between bending to the political will of the US and maintaining US market access, or defying US political interests and deepening ties with alternative trade blocs. This situation has ultimately resulted in a fragmented global economy. By early 2026, the world economy is accelerating into multipolarization, with the underlying trust in a globalized, rules-based system continuing to erode. This is evidenced by the fact that the US announced renewed tariffs against eight EU countries over their opposition to the US’s acquisition of Greenland in Jan-25, suggesting that the US will likely continue to use tariffs as an economic and foreign policy tool throughout Trump’s second presidency.

UNCTAD data suggests that governments globally are mirroring the US approach, using tariffs to pursue economic and strategic objectives, oftentimes implementing reciprocal tariffs against the US. This suggests that the 2025 trade war was not a temporary shock but the beginning of a permanent restructuring of global politics and trade. The global agri-food industry is one of the hardest hit global sectors affected by the US tariff implementation, with two major factors emerging that warrant attention heading into 2026 namely (1) market concentration risks and (2) price inflation in the supply chain.

Soybean Trade Realignment Exposes Export Concentration Risk

The 2025 trade war provided a textbook demonstration of market concentration risk, with the US soybean trade with China standing out as a clear example, exposing the risk of over relying on a single market for trade. Thus, US agri-food industries are not exempt from the fallout of US tariff policies. For over a decade, China has been the world’s largest buyer of soybeans, accounting for 61.1% of global imports by value in 2024 as illustrated in figure 1

Figure 1. China Import Value of Soybeans (HS 1201) from 2024 to 2025

During the same period, China has been the primary buyer of US soybeans, consistently accounting for more than 50% of US soybean exports, with US export market share to China standing at 51.9% in 2024 at 27 million metric tons (mmt) to the value of USD 12.76 billion as illustrated in figure 2 This demonstrates an over-reliance on the Chinese market for soybean exports, an opportunity that China seized to retaliate against US sanctions. Directly responding to the implementation of tariffs by the US in early 2025, China initiated a calculated and aggressive withdrawal from the US market, resulting in a dramatic embargo-by-tariff effect. By Aug-25, the effective duty on US soybeans spiked to 34% which consisted of a composite of retaliatory tariffs, value-added tax (VAT), and most favoured nations (MFN) duties.

Figure 2. United States Export Value of Soybeans (HS 1201) from 2024 to 2025

As a result, US soybeans became uncompetitive in the Chinese market which contributed to US soybean exports to China falling sharply in 2025. Oct-25 marked the fifth consecutive month of no soybean exports to China in 2025, the traditional start of the US exporting season. From Jan-25 to Oct-25 China accounted for just 19% of all US exports, less than half the traditional volume. China did not just cut off imports from the US, the country actively shifted soybean procurement to South America, primarily Brazil and Argentina, pursuing a long-term diversification strategy, effectively de-risking its food supply from US policy volatility.

China has since resumed buying US soybeans following a meeting between Presidents Xi Jinping and Donald Trump in late Oct-25, where the White House noted China agreed to buy 12 mmt from the current crop. This purchase level is far below the levels that China has imported from the US in recent years, and that loss of demand has put downward pressure on soybean prices and cost US farmers billions of dollars in lost sales. Although US soybean exports to China have resumed, the trading landscape is unlikely to return to the pre-tariff situation. China’s increased purchases of South American soybeans is likely to continue into the near future, especially following increased plantings by both Brazil and Argentina, China’s two primary South American suppliers. Resultantly, the US is likely to be relegated to a second option supplier in the future as China diversifies its soybean imports, with the aim of not over exposing itself to a single market again.

The 2025 US soybean situation is a perfect case study of how market concentration is a strategic liability. When a sector relies on a single dominant partner for its profitability, it surrenders its economic sovereignty to the geopolitical whims of that partner. For the US soybean industry, the 2025 tariffs did not just result in a tumultuous year, they triggered a global trade realignment that will structurally alter the global soybean trade for the foreseeable future.

Price Transmission Accelerated by Tariffs in Concentrated Markets

Another significant market force that tariffs introduce into the supply chain is increased costs that need to be absorbed by either market players or ultimately the consumer. Tariff measures tend to have disproportionately significant price effects in agricultural markets, particularly where sourcing flexibility is limited. In such markets, price shocks introduced at the border must be absorbed along the supply chain, from exporters and importers through to wholesalers and consumers. When tariffs are announced or threatened, importers immediately face higher expected costs and elevated policy risk. These pressures are rapidly transmitted downstream through higher landed costs, tighter margins, and precautionary pricing, ultimately resulting in higher consumer prices.

Tariff Uncertainty and Import Concentration Drove Early-2025 US Avocado Price Volatility

This dynamic was observed in the US avocado market in early 2025, following the US government’s announcement of a 25% tariff on agricultural imports from Mexico. Wholesale avocado prices peaked during Q1-2025, with average prices of USD 6.28/kg in Jan-25, USD 5.85/kg in Feb-25, and USD 6.10/kg in Mar-25. Tridge’s research further showed that US domestic wholesale prices for Mexican Hass avocados reached USD 9.33/kg in the Bronx for size 36 fruit in early 2025, compared with lows of USD 4.74/kg under similar conditions in early 2024. These sharp increases were driven largely by tariff-related uncertainty, particularly given that Mexico supplies approximately 80% to 90% of US avocado imports, while domestic production in California and alternative suppliers such as Peru and Colombia account for only marginal volumes.

Figure 3. US Wholesale Avocado Price Trend from 2024 to 2025

Following the temporary suspension of the 25% tariff in Mar–Apr 2025, wholesale prices eased as avocado flows into the US normalized and supply constraints softened. This price adjustment underscores how strongly avocado prices respond to perceived trade disruptions rather than to physical shortages. Looking ahead, according to the Hass Avocado Board (HAB), total avocado availability in the US is projected to exceed 3 billion pounds (lbs) in 2025/26, with Mexico expected to ship a record 2.5 billion lbs. However, any renewed tariff action or revival of trade restrictions in 2026 would likely reintroduce supply uncertainty, disrupt these anticipated inflows, and place renewed upward pressure on US avocado prices.

Seasonal Demand and Tariffs Reinforced Upward Momentum in US Beef Prices

A comparable tariff-driven price impact was observed in the US beef industry, a market already under structural supply pressure due to prolonged drought-induced cattle herd contraction. At the start of 2025, US beef cattle inventories stood at 27.96 million heads, representing a 0.92% YoY decline, which had already tightened market fundamentals. Against this backdrop, the announcement of tariffs in Q1-2025, primarily affecting imports from Mexico and Canada, pushed beef prices above Q1-2024 levels, averaging USD 10.58/kg in Feb-25 and USD 10.73/kg in Mar-25. From Apr-25, the introduction of a 10% baseline tariff expanded the impact to major beef exporters supplying the US, including Australia, Brazil, and Argentina. Combined with a seasonal demand build-up toward the summer grilling period, this policy shift contributed to a sustained upward price trajectory, with prices rising from USD 10.92/kg in Apr-25 to a peak of USD 13.67/kg in Aug-25. This pattern underscores how tariff-related cost increases were transmitted along the supply chain and ultimately absorbed by consumers, whose price sensitivity remained limited amid strong seasonal demand.

Figure 4. US Wholesale price trend for Fresh Boneless Beef Cut from 2024 to 2025

Following the price peaks observed after Aug-25, driven by strong demand amid supply constraints and tariff-related disruptions, US beef prices began to ease as demand softened. This decline largely reflected seasonal consumption patterns, with demand typically moderating as winter approaches. However, this downward trend coincided with a renewed trade policy shock, as the US administration introduced an additional 50% tariff on Brazilian beef, lifting total tariffs to 76.4%. The tariff escalation was expected to significantly constrain Brazil’s beef exports to the US, particularly given earlier expectations of shipments reaching approximately 400 thousand mt in 2025. However, US import volumes were partially insulated from disruption, as alternative suppliers, Australia and Argentina, capitalized on Brazil’s reduced competitiveness. Despite these headwinds, Brazil still managed to export 271 thousand mt of beef to the US in 2025, marking an 18.3% YoY increase.

A notable turning point came in Nov-25, when the US removed the additional 50% tariff on Brazilian beef, effectively restoring Brazil’s export competitiveness and reopening growth opportunities. Entering 2026, Brazil’s shipment momentum to the US has strengthened markedly. This is evidenced by Brazil fully utilizing its allocation under the 52-thousand mt duty-free “Other” quota within the first working days of January 2026. It is worth noting that the “Other” quota itself has been reduced from 65 thousand mt to 52 thousand mt, with the 13 thousand mt reallocated to the United Kingdom. This move tightens access to duty-free beef supplies and increases competition among exporters.

Geopolitical Realignment Creates Asymmetric Winners and Losers

Geopolitical trade conflicts usually lead to market power realignment, creating asymmetric winners and losers across global agricultural markets. As tariff escalation intensified in 2025, access to key destination markets for particular countries increasingly depended on political alignment and negotiation leverage rather than cost competitiveness. Exporters who are able to step into restricted market space, such as Brazil and Argentina in soybeans, or Australia and Argentina in US beef, emerged as clear winners, capturing market share not through structural advantages but through geopolitical timing. Conversely, highly concentrated exporters, particularly those reliant on a single dominant buyer or seller relationship, became immediate losers as policy shocks abruptly curtailed access, eroded revenues, and undermined long-term buyer confidence. This redistribution effect highlights how geopolitical conflict rewards diversification and penalizes dependency.

Meanwhile, consumers and downstream industries in tariff-exposed markets often absorb higher costs as price transmission accelerates in concentrated supply chains, turning households into indirect losers through food inflation.

Strategic Recommendations for 2026

The trade regulation developments underline the need for exporters and governments to reduce dependence on single major destination markets in 2026. The sharp decline in China’s share of US soybean exports demonstrates how geopolitical shifts can rapidly erode revenues when trade is overly concentrated. To mitigate this risk, producers and traders should increasingly adopt a portfolio trade strategy, spreading exports across multiple regions rather than relying on one dominant buyer. By diversifying markets, exporters can stabilize revenue streams and minimize the impact of sudden tariff escalations, embargoes, or quota reductions. Actively building commercial relationships in high-growth markets such as Southeast Asia, the Middle East, and Africa will be essential to stabilizing demand and revenues.

At the same time, the ongoing realignment of trade flows, such as China’s pivot toward South American soybeans, creates opportunities. To capitalize on trade realignment opportunities, countries and exporters should act strategically within the shifting global landscape. For instance, Brazil and Argentina can invest in logistics, financing, and port-to-processor supply chains to strengthen their positions in the Chinese market and lock in long-term demand, particularly in response to US–China trade tensions.

Meanwhile, US exporters should reposition toward higher-value product segments, including food-grade and identity-preserved offerings, targeting premium Asian markets beyond China. By enhancing supply chain flexibility, leveraging quota allocations, and adopting financial risk management tools such as futures or forward contracts, exporters can better absorb tariff-related cost pressures while maintaining competitiveness.