In new sign of trade battle, China slaps U.S. sorghum producers with 179 percent deposit

Source: By Emily Rauhala, Washington Post • Posted: Wednesday, April 18, 2018

Chinese workers spread steamed sorghum on the ground as they prepare it for the first fermentation to be used in locally made wine called baijiu at the Maopu Health Liquor Co. Distillery on September 24, 2016, in Guizhou province, China. (Kevin Frayer/Getty Images)

China announced temporary anti-dumping measures on U.S. sorghum, potentially hitting U.S. growers and exacerbating the brewing trade war between Beijing and Washington.

China’s Ministry of Commerce said that starting Wednesday, Chinese importers of U.S. sorghum, used by the Chinese for animal feed and brewing alcohol, will be required to put down a 178.6 percent deposit in anticipation of anti-dumping tariffs. The deposits could discourage imports of U.S. sorghum, hurting American producers.

Sorghum growers said the measure puts them at the center of a widening trade dispute through no fault of their own.

“We didn’t ask for this fight, but now we’re on the front lines of it,” said Tim Lust, the chief executive of the National Sorghum Producers, an industry group. “Farmers are really stuck in the middle of … this much larger fight [with China].”

The news came a day after the United States banned U.S. firms from selling parts to Chinese phone maker ZTE for seven years. The U.S. Commerce Department said ZTE violated an agreement reached after the company was caught shipping U.S. goods to Iran.

In a separate development, the Chinese government announced a timeline for lifting ownership limits on foreign automakers. The United States has long demanded better access to the Chinese market.

The moves on sorghum and foreign automakers take place amid heightened tension between the world’s two largest economies. In recent months, the United States and China have exchanged escalating threats of tariffs worth billions of dollars.

Hitting U.S. sorghum exports could hurt American growers — potentially having an impact on farming states that have backed President Trump.

Most U.S. sorghum is grown for the Chinese market, and farmers have planted more acres of the grain in recent years to keep up with demand from Chinese livestock producers. Exports exploded from 2013 to 2015 when China limited its imports of genetically modified corn and sent producers scouring for new feed sources.

Since then, sorghum exports have fallen back from their peak. But the crop remains important on the western edge of the U.S. corn belt. The top five sorghum producing states are Kansas, Texas, Colorado, Oklahoma and South Dakota. All but Colorado went for Trump in the 2016 presidential election.

China’s action is seen by some analysts as a warning sign to other areas of U.S. agriculture, particularly soybean producers, who in 2016 sent $12.4 billion of product to China. Earlier this month, China threatened tariffs against soybeans, pork and other U.S. agricultural products.

Li Qiang, chief analyst at Shanghai JC Intelligence, an agriculture consultancy, said this year’s crop has already been sold but that the news would “certainly” have an impact on U.S. growers going forward.

He said he sees the deposit move as a Chinese response to U.S. investigations into Chinese washing machines and photovoltaic panels. This is “trade frictions,” he said, but not a “trade war.”

Chinese officials said the new measure was the result of a months-long investigation that concluded that U.S. sorghum was being dumped on the Chinese market. Likely not coincidentally, U.S. critics often accuse China of dumping its own products, such as aluminum in January.

Lust vigorously denies that U.S. producers have engaged in dumping, and says his organization submitted thousands of pages of data to the Chinese government to demonstrate they did not.

But the Chinese Commerce Ministry said that U.S. sorghum exports to China rose from 317,000 tons in 2013 to 4.76 million tons in 2017, while the price of the exported sorghum fell 31 percent — harming Chinese farmers.

“This approach is in line with Chinese law and WTO rules; it aims at correcting unfair trade practices, maintaining normal trade and competition order,” wrote Wang Hejun, director of the ministry’s trade remedy and investigation bureau, in a statement.

IBecause few other countries export sorghum in significant amounts, China will likely turn to other grains, such as corn and barley, to supply livestock producers.

Caitlin Dewey in Washington and Yang Liu in Beijing