China enacts retaliatory tariff on US ethanol, 127 other products

By Erin Voegele | April 02, 2018

On April 2, China announced it is placing tariffs on 128 products imported from the U.S., including a 15 percent tariff on U.S. ethanol, effective immediately. The tariffs are in response to President Donald Trump’s decision to place duties on imported steel and aluminum products.

Trump issued two proclamations on March 22 enacting respective 25 percent and 10 percent 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.

On March 23, China’s Ministry of Commerce released a notice announcing the country was considering enforcing duties on 120 U.S. products in response to the new U.S. tariffs on steel and aluminum. The ministry has now implemented those duties.   

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 World Trade Organization rules and do not meet the security exemptions requirement.

China’s Ministry of Commerce published a notice April 2 indicating it informed the WTO of its plans to impose tariffs on 128 products imported from the U.S. in order to balance the impact of U.S. tariffs on imported steel and aluminum products. 

The Renewable Fuels Association has explained that the new 15 percent tariff on U.S. ethanol is in addition to an already imposed duty of 30 percent, making the total tariff 45 percent on U.S. ethanol.

 “Once again we were disappointed to learn of China’s retaliatory actions against ethanol,” said Bob Dinneen, president and CEO of the RFA. “China was the third-largest market for U.S. ethanol exports in 2016, accounting for almost 20 percent of total exports. However, once the country imposed its first U.S. ethanol import tariff, shipments to China nearly disappeared. In recent months, U.S. ethanol shipments to China resumed as the cost competitiveness of ethanol produced in the U.S. overwhelmed China’s protectionist policy. The imposition of this new additional tariff will likely again preclude sales to the country.

“This one-two protectionist punch will ultimately harm Chinese consumers who are being denied access to the lowest-cost, highest-octane, and cleanest fuel on the planet,” Dinneen continued. “But it will also hurt farmers in the U.S. who have worked to build value-added markets for their commodities here and abroad.

“RFA urges the administration to work aggressively to have this latest attack on America’s rural economy removed as quickly as possible,” Dinneen said.