WASHINGTON — Trade tensions heightened between the world’s top two economies Wednesday as China announced a 178.9% anti-dumping deposit on the value of U.S. sorghum shipments to the country.
Traders said the higher-than-expected deposit would essentially halt U.S. sorghum shipments to China for now, and raise prices of feed alternatives, such as barley and corn. The announcement comes just weeks after China threatened a tariff on the grain, used largely for livestock feed but also in spirits such as the fiery Chinese liquor baijiu.
The announcement from China’s Commerce Ministry on Tuesday said the deposits are temporary during the government’s ongoing anti-dumping investigation. No timeline was given for a final ruling on the matter.
China launched the investigation two months ago in retaliation to an aggressive U.S. trade stance that included tariffs on Chinese-made washing machines and solar panels. China said U.S. sorghum imports were being dumped in the country leaving its domestic industry “substantially damaged.” The ministry said the United States exported 317,000 tonnes of sorghum to China in 2013 and by 2017 shipped 4.76 million tonnes, harming Chinese farmers as the domestic price of the grain fell.
U.S. Grains Council records show the United States exported 4,800,480 tonnes of sorghum to China in 2016-17, up 217% from 1,902,700 tonnes in 2012-13, but down 42% from a recent peak of 8,907,770 tonnes in 2014-15.
U.S. Secretary of Agriculture Sonny Perdue in a statement Wednesday rejected Beijing’s claims and highlighted China’s ability to choose its trading partners.
“The international grain market is about the freest market there is, and it is ludicrous to even mention ‘dumping,’ because China can buy product from anywhere they choose,” he said. “This is clearly a political decision by the Chinese, and we reject their premise. Our sorghum producers are the most competitive in the world, and we do not believe there is any basis in fact for these actions.”
Secretary Perdue reiterated the Trump administration’s stance on trade practices and the goal of protecting American agricultural producers, including growers who produce sorghum.
“As we explore options, we are in communication with the American sorghum industry and stand united with them,” Mr. Perdue said. “The fact remains that China has engaged in unfair trade practices over decades, and President Trump is correct in holding them accountable. We remain committed to protecting American agricultural producers in the face of retaliatory measures by the Chinese.”
The 2017 tonnage of U.S. sorghum purchased by China was worth around $1.1 billion and comprised the bulk of that country’s total sorghum imports of about 5 million tonnes. Companies likely to be affected by the deposits include CHS Inc., Cargill, Louis Dreyfus and Archer Daniels Midland, top sellers of the grain to China.
The National Sorghum Producers, the Lubbock, Texas-based group that advocates for growers, vigorously denied China’s dumping allegations.
“U.S. sorghum is not being dumped in China, and U.S. sorghum producers and exporters have not caused any injury to China’s sorghum industry,” the group said.
The N.S.P. said the group, member producers, stakeholders and partners fully cooperated with China’s anti-dumping and countervailing duty investigations, including submitting several thousand pages of data “demonstrating conclusively” that U.S. sorghum is neither dumped nor causing injury to China. The group decried the apparent disregard of their data in China’s deposit determination.
“We continue to greatly value our Chinese customers and what has been a win-win business relationship between U.S. sorghum producers and our Chinese partners,” the N.S.P. said. “Today’s decision in China reflects a broader trade fight in which U.S. sorghum farmers are the victim, not the cause. And U.S. sorghum farmers should not be paying the price for this larger fight.
“Understanding the serious impact this preliminary decision will have on our farmers, N.S.P. and our partners will continue to demonstrate U.S. sorghum farmers are not injuring China. We are evaluating all legal options moving forward.”The U.S. Trade Representative’s office said it planned to review China’s sorghum measures and take action if needed, possibly through opening a case with the World Trade Organization.