Simi Thambi, a climate and nature economist at FAIRR, describes an unexpected environmental consequence of the Trump Administration’s tariffs on products from China. 

FAIRR is a network of investors concerned with reducing risks and exploring opportunities for trading in the global food system. It comprises more than 400 investors, with combined assets under management of $80 trillion. “It’s all about working together in bringing change step by step to the system,” Thambi says.

One of the biggest risks to emerge in the global food supply chain as a result of tariffs imposed on China by President Trump is their impact on soy markets. They’ve caused Chinese buyers to diversify purchases of soy away from U.S. suppliers in favor of Brazil, a country with “relatively poor traceability, being regularly linked to deforestation,” Thambi says.

The shift began during the previous U.S-China trade war in 2018 and 2019, causing accelerated deforestation in Brazil. Now, with the latest round of tariffs imposed on China by the Trump Administration, that threat promises to become even more serious, posing “a reputational and regulatory risk right up the value chain,” Thambi says.

Deforestation is among the environmental issues monitored by the Coller FAIRR Protein Producer Index, which evaluates 60 of the world’s largest livestock protein producers against 10 key performance indicators, including greenhouse gas emissions, biodiversity and water usage. The index finds that 75% of Chinese companies do not have a deforestation-free target for soy.

Buyers and suppliers of agricultural commodities will have to step up their game, in light of the European Union’s Regulation on Deforestation-Free Products (EUDR), scheduled to go into effect in December of this year. “We can expect that companies with links to countries with low disclosures in deforestation will be more exposed,” Thambi says.