- Temporary deposit as high as 178.6% effective Wednesday
- Beijing finds US dumping sorghum, damaging domestic industry
- Beijing launched probe in retaliation for US trade actions
- Deposit higher than expected; imports now ‘dead’, say traders
Beijing (Reuters): China said on Tuesday it will slap a hefty temporary deposit on imports of US sorghum after finding the US grain has damaged the domestic industry in a preliminary antidumping ruling, stirring trade tensions between the world’s top two economies.
CHS Inc and other US companies will have to put a 178.6% deposit on the value of sorghum shipments to the country in what Beijing called a “temporary antidumping measure” as the government continues to probe imports of the grain.
Trade sources said the deposit or fee was much higher than they had expected and will likely bring U.S. imports to a halt and inflate prices of alternatives, such as barley. Sorghum is used in livestock feed and the fiery Chinese liquor baijiu.
The deposit, which trade experts equated with a duty, is effective from Wednesday, the Ministry of Commerce said in a statement. It is the latest shot by Beijing at its top trading partner in a mounting trade spat, likely aimed at major American farm states that backed US President Donald Trump.
“It’s very high. Basically US sorghum won’t be able to come in,” said Fan Jingya, grains analyst at Cofco Futures.
The move comes out of an anti-dumping investigation launch just two months ago in retaliation for aggressive trade actions by Washington, including steep tariffs on solar panels and washing machines.
The United States shipped 4.76 million tons of sorghum to China in 2017, worth around $1.1 billion and making up the bulk of China’s roughly five million tons of imports of the grain last year, according to Chinese customs data.
Other companies likely to be affected are Archer Daniels Midland – a top seller of US sorghum into China – along with Cargill and Louis Dreyfus.
The government said on Tuesday it found the domestic industry was “substantially damaged” by US sorghum imports that are being dumped into the country. It said it will issue a final ruling at a later date, but did not give a timeline.
Prices of soymeal and rapeseed meal used in animal feed jumped as the move kindled concerns that China would also impose penalties on soybeans and other agricultural products from the United States as the spat escalates.
The world’s top importer of soybeans threatened earlier this month to impose tariffs on sorghum, soybeans and 104 other US products.
The deposit scheme is in addition to that proposal.
Curbing imports of grains is considered one of the most powerful weapons in Beijing’s arsenal in the growing spat with the United States. This would hit at Trump’s core political base at a time when the global grain market is in surplus and growers world-wide are struggling to find homes for their products.
Soybeans were the biggest US agricultural export to China last year at a value of $12 billion.
Still, trade experts and farmers say limiting imports of livestock feed ingredients could push up prices locally, hurting China’s vast agricultural sector and potentially inflating retail pork prices in the world’s top consumer of the meat. Traders, who had rushed to increase imports prior to the ruling, were reeling from the scale of the deposit on Tuesday. A trader with an international firm estimated there are more than two million tons of sorghum on the water heading for China. “We were expecting like 35%,” said a source at another international trading house. “Sorghum imports now are dead. No one can afford that high amount of tariffs.”
Imports are usually high in April and May, but cargos are likely to get diverted to other points in Asia, traders said.
“I don’t know what (the importers) will do, but it will be rough,” the first trader said.
EU demands compensation for US steel tariffs at WTO
GENEVA (Reuters): The European Union is seeking compensation from the United States for US tariffs on steel and aluminium, despite Washington’s assertion that they are not subject to World Trade Organization rules, a WTO filing showed on Monday.
In a step already taken by China, the EU said it did not accept the “national security” justification for the US tariffs but said they had been imposed just to protect US industry.
“Notwithstanding the United States’ characterisation of these measures as security measures, they are in essence safeguard measures,” the EU statement said.
Safeguard tariffs can be imposed on imports of a particular product if a country’s own industry is at risk of serious damage from a sudden surge of imports. In the US case, critics of Trump’s policy say there is no such threat. The EU said it wanted to hold consultations with the United States as soon as possible.
US President Donald Trump announced the tariffs last month, causing a global outcry because the penalties were seen as unjustified and populist. Countries can claim exemption from many international trade rules if they can show they are imposing tariffs to protect their national security. But those exemptions do not apply for safeguard sanctions.
The EU and other US allies are not only worried the tariffs will limit that amount of their goods getting into the United States. They also fear steel barred from the United States will flood back into their markets, causing a glut.
China had said it will retaliate by putting duties on up to $3 billion of US imports including fruit, nuts and wine.
The EU is drawing up its own list of duties.