China will slap hefty antidumping deposits on imports of US sorghum from Wednesday, the government said as trade tension escalates between the world’s top two economies.
The charge on the grain used in livestock feed and the spirits industry was higher than expected. CHS and other US companies will have to put up a 178.6% deposit on the value of sorghum shipments to the country in what Beijing called a temporary measure, as the government continues to probe imports of the grain.
Traders said the deposit was high enough to bring US imports to a halt and inflate prices of alternatives, such as barley. Sorghum is used in livestock feed and the fiery liquor baijiu.
"De facto, it stops all the trade," said Mike O’Dea, a US trader for broker INTL FCStone.
Beijing has also threatened a tariff on US soya beans. China purchased $12bn worth of US soya beans last year, making it the most valuable US agricultural export to China.
The US shipped 4.76-million tonnes of sorghum to China in 2017, worth about $1.1bn and making up the bulk of China’s roughly 5-million tonnes of imports of the grain last year, according to Chinese customs data. Just last week, about 116,000 tonnes of US sorghum was shipped from Texas, US agriculture department data showed on Monday.
The US Trade Representative’s office said in a statement it would "carefully review China’s measures on sorghum and take action as warranted, including through a World Trade Organisation case if appropriate".
White House deputy press secretary Lindsay Walters added that President Donald Trump "has made it clear that any further illegal trade actions by China are not acceptable, including the unfair targeting of US sorghum producers".
Walters also acknowledged recent announcements by Beijing about easing ownership limits in some sectors.
"While we appreciate that China is recognising long-standing US concerns about discriminatory practices in the autos, ship and aircraft sectors, we await actual implementation of any policy change," she said.
The sorghum industry group that represents US farmers, National Sorghum Producers, maintained that the crop was not being dumped in China.
"Today’s decision in China reflects a broader trade fight in which US sorghum farmers are the victim, not the cause," the group said.
China’s move comes out of an antidumping investigation launched two months ago in retaliation for aggressive trade actions by Washington, including steep tariffs on solar panels and washing machines.
Beijing said it found the domestic industry was "substantially damaged" by US sorghum imports being dumped into the country. It said it would issue a final ruling at a later date, but did not give a timeline.
Other companies that are likely to be affected by the deposits are Archer Daniels Midland, a top seller of US sorghum into China, as well as Cargill and Louis Dreyfus.