China considers retaliatory tariff on ethanol, 127 other products

By Erin Voegele | March 23, 2018

The government of China has announced it is considering enforcing duties on 128 U.S. products, including a 15 percent duty on U.S. ethanol, in response to President Donald Trump’s decision to impose respective 25 percent and 10 percent tariffs on imported steel and aluminum products.

On March 22, Trump issued two proclamations enacting the tariffs on steel and aluminum. The tariffs went into effect March 23. He also issued a third proclamation exempting Argentina, Australia, Brazil, Canada , Mexico, EU member countries and South Korea from the tariffs through May 1, “pending discussions of satisfactory long-term alternative means to address the threatened impairment to U.S. national security.” Trump said he will make a decision on whether to continue these exemptions by May 1.

A notice posted by China’s Ministry of Commerce states that while the U.S. is imposing the steel and aluminum tariffs on the ground of national security, the government of China views the action as a safeguard measure. The ministry indicated that China believes that the U.S. tariffs violate WTO rules and do not meet the security exemptions requirement. In order to protect its interests, China intends to suspend substantive equal concessions and other obligations to the U.S. in accordance with relevant WTO rules and China’s trade laws.

“China’s response was entirely predictable, given recent actions by our administration to implement new tariffs,” said Bob Dinneen, president and CEO of the RFA. “It is my fervent hope that the White House now fully understands the impact these actions will have on America’s ethanol industry and farmers, and we urge the administration to redouble its efforts to expand demand for ethanol here at home. Unfortunately, over the last several months, EPA has been consistently and aggressively destructing biofuel demand. That must stop and meaningful action to expand biofuel demand must begin by allowing the year-round use of E15 nationwide.”

Emily Skor, CEO of Growth Energy has expressed disappointment that China is seeking additional tariffs on U.S. ethanol exports. “China has and continues to be an important market for ethanol and for dried distiller's grains, and we want to remove any of these unnecessary barriers as soon as possible.  We will work closely with our government to keep this important market open to the benefit of both American agriculture and Chinese consumers,” Skor said. “These actions could undercut our potential to increase exports to China following the country’s stated goal to move to a 10 percent ethanol blend by 2020, and would be a major barrier to increased trade.”

According to the RFA, China was the third-largest market for U.S. ethanol exports in 2016, accounting for nearly 20 percent of exports. China significantly increased its tariff rates on U.S. ethanol in January 2017, which caused shipments to collapse. Even though the high tariff rate was still in place, U.S. shipments of ethanol to China began to resume in late 2017 due how economically competitive the fuel was. In December 2017, China imported 22 million gallons of U.S. ethanol, accounting for 13 percent of U.S. exports that month.