China slaps punitive tariffs on US ethanol and DDG exports

January 15, 2017 |

In China, the national government slapped the US ethanol industry with heavy tariffs that went into effect last Thursday. U.S. farmers say the tariffs will cost U.S. agriculture at least $2B per year.

Preliminary tariffs on U.S. DDG, totaling more than 40 percent, were imposed by China several months ago, causing the price of DDG to drop by about 30 percent, or about $60 per ton, affecting the 36 million tons of DDG produced annually in the U.S. The combined tariffs, now totaling more than 80 percent, will effectively close the Chinese animal feed market to U.S. DDG.

Earlier this month, China also stated its intention to raise its 5 percent tariff on U.S. fuel ethanol to 30 percent. The ethanol industry, largely owned by corn growers across the U.S., is a significant contributor to the balance of trade between the U.S. and China.

“The Chinese tariffs are negatively impacting the U.S. ethanol industry’s exports, of not only ethanol, but our co-product of Dry Distillers Grain (DDG), a high-quality animal feed that is favored by Chinese livestock producers and is the largest export market for U.S. DDG,” says Mark Marquis, CEO of Marquis Energy. “These tariffs are the poster child of bad trade deals,” Marquis added. “It is our opinion that the Chinese calculations are not in line with WTO trade rules.”

The U.S. DDG industry cooperated with the Chinese tariff investigation, even hosting Chinese Ministry of Commerce (MOFCOM) investigators at several U.S. production facilities, including the Marquis Energy facility in Illinois. Nevertheless, China ignored the factual data provided by the U.S. industry, disregarded WTO trade rules and used its own unknown calculations to impose these punitive tariffs.

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Category: Policy

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