The United States is structurally vulnerable because it exports most soybeans as whole beans while foreign processors capture the higher-value oil and meal, giving China a tool for economic coercion. Increasing domestic crushing and redirecting about 1 billion bushels into U.S. biofuel production could yield roughly 30–40 million barrels oil-equivalent and retain high-protein meal for the U.S. food chain. Since 2023 more than $6 billion has been invested to expand U.S. processing capacity, but those investments need policy certainty. The EPA's proposed 2026–2027 Renewable Fuel Standard would prioritize domestic soybean oil with full RIN credit and tighten verification to block fraudulent imports.
Disarming China’s Soybean Leverage: How U.S. Biofuels and Processing Can Protect Farmers, Fuel, and Jobs
When U.S. farmers rely heavily on a single foreign buyer, American trade policy can become hostage to external decisions. No country has exploited that weakness more visibly than China, and no commodity has been turned into a political instrument more clearly than U.S. soybeans.
The Structural Vulnerability
American growers produce more than 4 billion bushels of soybeans each year—nearly one in three soybeans grown globally—yet fewer than one-fifth of those beans are crushed domestically. Instead, much of the harvest is exported as whole beans, low-value bulk commodities whose higher-value derivatives—soybean oil and soybean meal—are captured and processed overseas. That structure leaves U.S. farmers and rural communities exposed to sudden shifts in foreign buying patterns.
How China Has Used Soybeans As Leverage
History offers sharp examples: in 2018, when tariffs were imposed on China, Beijing responded by slashing U.S. soybean purchases; a similar pattern reappeared in 2025 after reciprocal tariff actions. Those moves demonstrate that soybean purchases can be deployed as a tool of political coercion. Meanwhile China is also working to harden its own supply chains to reduce reliance on U.S. soy—underscoring why the United States must act to eliminate this vulnerability.
Why Domestic Processing Matters
Processing soybeans in the United States accomplishes three strategic goals:
- Reduce Leverage: Keeping crushing at home removes the simple "cancel" switch that foreign buyers can flip.
- Secure Food Supply: Soybean meal is the primary protein feed for cattle, hogs, poultry, dairy, and aquaculture; domestic crushing keeps this critical input onshore and stabilizes feed and grocery prices.
- Support Rural Jobs: Increased processing creates manufacturing jobs in rural communities and strengthens local economies.
Biofuels As A Strategic Demand Anchor
Redirecting soybeans into domestic biofuel production is a practical way to anchor demand. Applied to the roughly 1 billion bushels that China often treats as a pressure point in a high-export year, the soybean oil could yield an estimated 30 to 40 million barrels of oil-equivalent fuel. Processed and consumed domestically, that supply would expand fuel availability, ease pressure on diesel and distillate prices, and deliver a lower lifecycle emissions profile than petroleum diesel.
Policy Levers: The Renewable Fuel Standard
The Renewable Fuel Standard (RFS) creates market incentives through tradable Renewable Identification Numbers (RINs). The Environmental Protection Agency's proposed RFS volumes for 2026 and 2027 would strengthen the program and, for the first time, explicitly favor domestic producers: biofuels made from U.S. soybean oil would receive full RIN credit while fuels derived from imported oils would receive only half credit. This distinction would decisively shift demand toward American crushers and farmers.
The proposal also tightens traceability and verification to curb a known abuse: the import and substitution of foreign oils labeled as "waste" that have been used to capture biofuel credits. Stronger oversight would close loopholes that have allowed questionable imports to undercut U.S. producers and distort the market.
Private Investment And The Path Forward
Private capital is already responding: since 2023, more than $6 billion has been invested to expand U.S. soybean processing capacity by roughly 25 percent. If this capacity is fully utilized, the United States could process a majority of its soybean crop domestically—sharply reducing exposure to foreign retaliation and supporting rural manufacturing jobs. But these investments depend on policy certainty that demand for domestic soybean oil will be sustained, not undercut by imports or abrupt regulatory shifts.
Conclusion
Finalizing and expediting a stronger RFS that privileges domestic feedstocks is a concrete step to transform soybeans from a national vulnerability into a strategic asset. Anchoring soybean oil demand at home strengthens energy security, stabilizes food supply chains, protects rural jobs, and removes one of the most effective economic levers available to adversaries.
Peter Navarro is the White House senior counselor for trade and manufacturing.
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