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China slaps 179 percent tariff on $1 billion worth of US sorghum imports

MAOTAI, CHINA - SEPTEMBER 24: Chinese workers shovel steamed sorghum as it is prepared for the first fermentation to be used in locally made wine called baijiu at the Maopu Health Liquor Co. Distillery on September 24, 2016 in Maotai, on the Chishui River, in Guizhou province, China. China is the main buyer of U.S. sorghum, but those imports could soon be hit by heavy tariffs. (Photo by Kevin Frayer/Getty Images)

China’s Commerce Ministry announced Tuesday that it would be slapping a temporary 178.6 percent mandatory “deposit” on imports of sorghum from the United States. According to NPR, the deposit will act like a tariff on these imports.

What is sorghum?

Sorghum is a cereal grain. In China, it is used as cattle feed, as a sweetener, and in a popular Chinese liquor called “baijiu.” U.S. exports of sorghum to China amount to roughly $1 billion annually, making China the largest international buyer of American sorghum. Most U.S. sorghum is produced in Southern states.

When will this tariff take effect?

While the U.S. and China have both threatened increasing levels of tariffs on a variety of goods, up until now most of these have only been proposals or threats. This one is different. The deposit on sorghum will go into effect Wednesday. China had threatened earlier to implement a 25 percent tariff on sorghum.

There is a chance, however, that the policy could be reversed later on.

Why is China targeting U.S. imports?

The deposit on sorghum is reportedly retaliation for U.S. tariffs on Chinese-made solar panels and washing machines, which were implemented in late 2017.

The Chinese government says that the decision followed a two-month-long "anti-dumping"  investigation into sorghum imports from the U.S. China had accused the U.S. of subsidizing the shipments to keep them artificially low, so that they could undersell Chinese farmers.

Both the U.S. and China have threatened each other with tariffs on a variety of imports. The amount of goods that China has threatened to impose duties on is more than $50 million. This back-and-forth, which the White House insists is not a trade war, escalated after President Donald Trump announced on March 1 that he would be signing a 25 percent tariff on all steel imports to the United States, and a 10 percent tariff on all aluminum imports. Sorghum exports are about twice as valuable as aluminum imports from China, according to Reuters.

When the U.S. steel and aluminum tariffs were signed, more than 100 Republican members of Congress signed a letter on March 7 to “express deep concern about the prospect of broad, global tariffs on aluminum and steel imports.”

The letter urged President Trump to “reconsider the idea of broad tariffs to avoid unintended negative consequences to the U.S. economy and its workers.”

One last thing…
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