(Adds reaction from U.S. industry, background)
By Josephine Mason and Hallie Gu
BEIJING Jan 11 China has increased punitive
tariffs on imports of a U.S. animal feed ingredient known as
distillers' dried grains (DDGS) from levels first proposed last
year, potentially escalating a trade spat between the world's
two largest economies.
The ruling is a major victory for China's fledgling ethanol
industry, which had complained the U.S. industry was unfairly
benefiting from subsidies, and followed a year-long government
It also deals a blow to U.S. ethanol manufacturers already
bracing for Beijing's higher import taxes on their main product.
DDGS are a byproduct of the corn-based biofuel that have become
a key contributor to profits. The industry is pumping out record
volumes of biofuel and is facing domestic political uncertainty
as they wait for President-elect Donald Trump to take office.
In a final ruling, the Commerce Ministry said on Wednesday
that anti-dumping duties would range from 42.2 percent to 53.7
percent, up from 33.8 percent in its preliminary decision in
September. Anti-subsidy tariffs will range from 11.2 percent to
12 percent, up from 10 percent to 10.7 percent.
Beijing said it found the domestic DDGS industry had
"suffered substantial harm" due to subsidised imports from the
United States. China is the world's top buyer of DDGS and buys
almost all of its needs from the United States, the largest
The U.S. Trade Representative did not respond to request for
comment. U.S. Grains Council President and Chief Executive
Officer Tom Sleight said in a statement on Wednesday the group
is "deeply disappointed" by the news and by the increase in
China's ethanol import tariffs from 5 to 30 percent.
The moves are "effectively stopping a growth market for
U.S. farmers and ethanol producers," he said.
U.S. producers have been seeking new markets, notably China.
Companies hit by the new tariffs include global traders Archer
Daniels Midland Co (ADM) and Louis Dreyfus,
biofuel producer Poet LLC, oil refiner and ethanol producer
Valero Energy Corp and grains group Andersons Inc
The penalty hike was larger than experts expected, and came
amid growing tensions between the two countries over China's
corn subsidies and its steel and aluminium exports.
Trump, who takes office on Jan. 20, has threatened to impose
punitive tariffs on Chinese goods coming into the United States.
Many Chinese businesses have already started to wind back
imports of U.S. DDGS since the preliminary ruling in September,
switching to domestic suppliers or alternatives like soymeal.
"I don't buy DGGS from the U.S. anymore and have turned to
domestic DDGS, soymeal and rapemeal," said Mr. Hu, who is in
charge of buying protein in southern China for feed manufacturer
New Hope Liuhe. He declined to give his first name
as he is not authorised to speak to the media.
Shipments in October and November fell to 135,000 tonnes and
163,000 tonnes respectively, about a third of the total in
August before the first ruling.
The new rates will take effect from Thursday and be in force
for five years.
(Reporting by Josephine Mason and Beijing newsroom; Additional
reporting by Chris Prentice in New York and Michael Hirtzer in
Chicago; Editing by P.J. Huffstutter and Andrew Hay)