BEIJING (AP) - In response to the Trump administration’s recent tariffs on imports of solar panels and washing machines, China last week launched a dumping and subsidy investigation into imports from the U.S. of sorghum.
The news caused the Sorghum prices to drop 25 percent.
The imported cereal grain is used to feed China's growing livestock sector. China is also the top buyer of U.S. sorghum as well as soybeans. Last year the U.S. shipped nearly 4.7 tons of sorghum to China, worth around $1.1 billion according to Chinese customs data.
In testimony before the House Agriculture Committee last week shortly after the sorghum announcement, U.S. Ag Secretary Sonny Purdue reinforced the precarious position ag now finds itself in: “It just shows you as an example how fragile and sensitive the [agriculture] economy and commodity prices are now to trade disruptions and we need to be careful as we take actions there,” Purdue testified.
Sorghum is one of the top five cereal crops in the world. The United States is the world's largest producer of grain sorghum, having produced 480 million bushels in 2016. The top growing states in the U.S. are Kansas, Texas, Colorado, Oklahoma, and South Dakota.
China's export growth accelerated in January amid mounting trade tension with Washington while imports surged as factories stocked up ahead of the Lunar New Year holiday.
Exports rose 11.1 percent compared with a year earlier to $200.5 billion, up from December's 10.9 percent growth, trade data showed Thursday. Exports surged 36.9 percent to $180.1 billion, up from the previous month's 4.5 percent.
China's politically sensitive trade surplus with the United States widened by 2.3 percent from a year ago to $21.9 billion, while its global trade gap narrowed by 60 percent to $20.3 billion.
"While we expect the favorable external setting to continue to support China's exports, rising U.S.-China trade friction remains a key risk," said Louis Kuijs of Oxford Economics in a report. "We expect the U.S. administration to scale up on measures impeding imports from China."
Beijing's steady accumulation of multibillion-dollar trade surpluses with the United States has prompted demands for import controls.
President Donald Trump's administration increased duties on Chinese-made washing machines, solar modules and other goods it says are being sold at improperly low prices. It is due to announce results of a probe into whether Beijing improperly pressures foreign companies to hand over technology, which could lead to further penalties.
Chinese authorities have accused Trump of threatening the global trade regulation system by taking action under U.S. law instead of through the World Trade Organization. Beijing has filed a challenge in the WTO against Washington's latest trade measures.
"We oppose this unilateralism and protectionist approach and hope the United States will deal with it prudently," said a Ministry of Commerce spokesman, Gao Feng, at a regular news briefing last week.
A Chinese government spokesman said an anti-dumping probe of imported U.S. sorghum is a "normal case of trade remedy" following suggestions it might be retaliation for Washington's investigation of Chinese steel and other goods.
The Ministry of Commerce announced Sunday it was investigating whether U.S. sorghum was being exported to China at improperly low prices. That followed White House decisions to raise tariffs on some Chinese-made washing machines and solar power equipment and to investigate steel imports and Beijing's technology policy.
"I hereby just want to stress that it is merely a normal individual case of trade remedy investigation," foreign ministry spokesman Geng Shuang said at a regularly scheduled news briefing.
The Ministry of Commerce said it launched the probe of U.S. sorghum after concluding large volumes and falling prices hurt Chinese producers. It could raise import duties or take other steps if it finds the United States acted improperly.
Ag exports targeted
Businesspeople have suggested Beijing might target U.S. agriculture exports if it wanted to retaliate in the event the Trump administration takes more severe actions on trade.
The White House is believed to be on the verge of announcing results of an investigation into whether Beijing improperly pressures foreign companies to hand over technology.
Beijing has accused U.S. President Donald Trump of threatening the stability of the international trade regulation system by taking action under U.S. law instead of through the World Trade Organization.
U.S.-Chinese trade relations are "mutually beneficial," Geng said.
"We are willing to deepen reciprocal cooperation with the United States and continue benefiting the two peoples," he said. "We hope the United States will go along with China to make concrete efforts to this end."