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

Employees spread out steamed sorghum to cool ahead of fermentation at the Kweichow Moutai Co. distillery in the town of Maotai in Renhuai, China, Thursday, Dec. 14, 2017. Bloomberg photo by Qilai Shen.

BEIJING - China announced Tuesday, April 17, 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.

The news came a day after the United States banned U.S. firms from selling parts to Chinese phone-maker ZTE Corps 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 the lifting ownership limits on foreign automakers. The U.S. has long demanded better access to the Chinese market.

These moves take place against a backdrop of heightened tension between the world's two largest economies. In recent months, the U.S. and China have exchanged escalating threats of tariffs worth billions of dollars.

Hitting U.S. sorghum exports could hurt U.S. growers - potentially having an impact on farming states that have backed President Trump. The top five sorghum producing states are Kansas, Texas, Colorado and Oklahoma.

Earlier this month China threatened tariffs against soybeans, pork and other U.S. agricultural products primarily produced in Trump-supporting states.

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

He saw 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 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.

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

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

In China, sorghum is used in animal feed and also in the production of a popular type of Chinese liquor.

Story by Emily Rauhala. The Washington Post's Yang Liu contributed from Beijing.