China’s Ministry of Commerce said on Wednesday it will keep anti-dumping and anti-subsidy tariffs on imports of U.S. distillers grains (DDGs), a by-product of ethanol production used in animal feed, after closing a review introduced in April.
In a statement, the ministry cited potential harm to domestic producers in its decision to maintain anti-dumping duties of 42 .2%-53 .7% and anti-subsidy tariffs of 11 .2%-12% on DDGS products from the United States.
“U.S. DDGs products might re-enter Chinese market in large volume, and hit the domestic sector if anti-dumping and anti-subsidy tariffs on the product were terminated,” the commerce ministry said in the statement on its website.
Beijing launched the review amid trade discussions between Beijing and Washington aimed toward ending the prolonged China-United States trade war that has roiled global markets.
Sino-U.S. trade tension escalated again in early May, with the 2 sides hiking up tariffs on each other’s products, virtually halting talks. But optimism that the row could be resolved had grown ahead of a meeting between Presidents Donald Trump and Xi Jinping next week.
With hopes for a trade deal rekindled, the timing of Wednesday’s move left some market participants perplexed.
“The result is expected but the timing to announce it is a little surprising,” said a manager at major domestic ethanol and DDGs producer in China. He rejected to be recognized as he was not authorized to talk to media.
If a trade deal were to be agreed, it might see China transferring to import a large volume of U.S. agriculture products – including DDGs.
“I think China is stating its attitude, saying ‘We are prepared. If you want a war, we can keep fighting,” said a trader with a state-owned firm. The trader rejected to be named due to the sensitivity of the matter.
China’s anti-dumping tariffs on U.S. DDGS were first implemented in 2016 at a rate of 33 .8%. Imports of the feed ingredient from the United States fell sharply.
Anti-dumping duties were increased to the current level of 42 .2%-53 .7% in January 2017 , while the anti-subsidy tariffs were raised to 11 .2%-12% from 10 .0%-10 .7% .
China bought 3 million tonnes of DDGS in 2016, mainly from the United States and worth $684 million, according to Chinese customs data. Imports that year were down 55 percent from 2015.