BEIJING (Reuters) – China has launched an anti-dumping and anti-subsidy investigation into imports of sorghum from the United States, the Ministry of Commerce said on Sunday, less than a fortnight after U.S. President Donald Trump slapped steep tariffs on imports of solar panels and washing machines.
Beijing’s action is expected to immediately hit demand for the upcoming U.S. sorghum crop, exports of which are largely used to feed China’s huge livestock sector, and send shivers through the entire U.S. farm sector.
China is the top buyer of U.S. sorghum as well as soybeans, the United States’ most valuable export to the world’s No. 2 economy.
“I personally believe this is China’s response to Trump’s action on washing machines,” said Li Qiang, chief analyst at agriculture consultancy Shanghai JC Intelligence Co Ltd.
“If he takes any further measures, they will consider soybeans,” he added.
The U.S. shipped 4.76 million tonnes of sorghum to China in 2017, the bulk of China’s roughly 5 million tonnes of imports of the grain that year, and worth around $1.1 billion, according to Chinese customs data.
That makes it almost twice as valuable as exports of Chinese aluminium alloy sheet to the U.S., also subject to recent trade action by Washington, which is being seen as another possible trigger for Beijing’s move.
Like the U.S. aluminium investigation, China’s commerce ministry investigation into sorghum was self-initiated.
The ministry said it had initiated the investigation because the local industry included a large number of small growers who were unable to prepare the necessary documentation.
Preliminary evidence and information found that imported sorghum from the U.S. had been exported at a lower than normal value, it said, damaging local producers.
The trade action comes a year after Beijing slapped hefty anti-dumping and anti-subsidy duties on imports of distillers dried grains (DDGS) from the U.S., another product used as a feed ingredient, although it recently reduced VAT on DDGS imports.
Exports of U.S. soybeans to China are also under pressure from stiff competition from rival exporter Brazil, with export sales hitting a seven-month low last week.
The investigation into sorghum dumping will be carried out for the period from Nov. 1, 2016 until Oct. 31, 2017, while an investigation of industrial injury will be from Jan. 1, 2013 until Oct. 31, 2017, said the commerce ministry statement.
The investigation should be complete by Feb. 4, 2019, it said, but can be extended until Aug. 4, 2019.
Reporting by Dominique Patton