China slapped an additional 15% tariff on imports of ethanol from the United States on Monday, increasing the likelihood those exports will fall to zero for the second time in two years. China made the announcement in response to tariffs imposed on aluminum and steel imports into the U.S.
When China implemented a 30% tariff on imports of ethanol from the U.S. in January 2017, it effectively shut off the Chinese market until November of 2017 when a small amount of ethanol was exported to China.
Bob Dinneen, president and chief executive officer of the Renewable Fuels Association, said in a statement on Monday the additional tariff likely will be another real hit.
"Once again we were disappointed to learn of China's retaliatory actions against ethanol," he said. "China was the third-largest market for U.S. ethanol exports in 2016, accounting for almost 20% of total exports. However, once the country imposed its first U.S. ethanol import tariff, shipments to China nearly disappeared. In recent months, U.S. ethanol shipments to China resumed as the cost competitiveness of ethanol produced in the U.S. overwhelmed China's protectionist policy. The imposition of this new additional tariff will likely again preclude sales to the country.
"This one-two protectionist punch will ultimately harm Chinese consumers who are being denied access to the lowest-cost, highest-octane, and cleanest fuel on the planet. But it will also hurt farmers in the U.S. who have worked to build value-added markets for their commodities here and abroad. RFA urges the administration to work aggressively to have this latest attack on America's rural economy removed as quickly as possible."
China was the third-largest market for U.S. ethanol in 2016, accounting for about 20% of total exports.
Although the first 30% Chinese tariff on U.S. ethanol was painful, the industry resumed shipments to China in 2017 because the fuel was economically competitive enough to still be cost efficient for the country to import.
China imported 22 million gallons in December 2017, which represented 13% of total U.S. exports that month.
Even with China's exit from the U.S. import market, the ethanol industry exported a record volume of 1.37 billion gallons in 2017 to more than 60 countries.
Brazil was U.S. ethanol's top customer in 2017, accounting for 33% of U.S. industry exports. Canada was the No. 2 importer for U.S. ethanol, accounting for 24% of all U.S. exports.
The U.S. ethanol export market has steadily grown since 2013, starting that year at 613 million gallons. The volumes grew to 839 million in 2014, to 910 million in 2015, and 1.17 billion gallons in 2016.
Todd Neeley can be reached at firstname.lastname@example.org
Follow me on Twitter @toddneeleyDTN
© Copyright 2018 DTN/The Progressive Farmer. All rights reserved.