China Opens Inquiry Into U.S. Sorghum as Trade Tensions Worsen

BEIJING — China has opened an anti-dumping and anti-subsidy investigation into sorghum imports from the United States, the latest salvo in an escalating trade dispute between the world’s two largest economies.

The decision, announced by China’s Commerce Ministry on Sunday, could result in China imposing steep tariffs on sorghum. It came less than two weeks after the United States said it was imposing tariffs on solar panels and washing machines that were aimed at curbing cheap imports from China and South Korea.

In espousing his “America First” agenda, President Donald Trump has pledged to protect manufacturers in the United States. He has labeled the challenges posed by the Chinese economy as a threat to U.S. national security and opened separate trade investigations related to Chinese steel and aluminum imports and into whether Chinese stole intellectual property.

In its statement, China’s Commerce Ministry did not link its investigation to the decision on solar panels and washing machines. The ministry said it obtained “preliminary evidence and information” that showed that imported sorghum from the United States had received subsidies from the U.S. government. The agency found that domestic producers in China had suffered as a result.

“It’s already a partial trade war,” said Li Qiang, chief consultant at Shanghai JC Intelligence Co., an agriculture consultancy. “In our opinion, this is related to the deterioration in the Sino-U.S. relationship.”

The ministry’s initiation of the investigation “suggests that the government had it teed up and it’s not a response or demand from the industry for protection,” said Chad Bown, a senior fellow at the Peterson Institute for International Economics.

“It’s the government taking action, which is what you would expect if they are trying to send a message to retaliate,” Bown said.

Sorghum is a type of grain that is mostly used in China to feed livestock. It is also used to make baijiu, a clear liquor with a pungent aroma that sells well among the rich in China and is often served at banquets. More than three-quarters of the sorghum the United States exports goes to China, according to the U.S. Grains Council, a grain export industry group.

The United States exported about 4.8 million tons of sorghum to China in 2017, worth about $1 billion, accounting for nearly all of China’s imports of the grain last year, according to Chinese customs data.

Retaliating against the agricultural sector is not a surprise. A U.S. business lobby group warned last week that Chinese officials had threatened to retaliate against U.S. companies if the Trump administration imposed tariffs, saying that agricultural and aircraft imports may be the most at risk.

Bown said some farmers would suffer but the broader U.S. economy would not be substantially harmed if tariffs were to be imposed only on the sorghum industry. The worry is that, as trade frictions escalate, tariffs could spread to more economically important sectors, such as soybeans, he said.

Soybean exporters are a powerful political constituency for Trump. China imported $14 billion worth of soybeans from the United States in 2016, according to data from the U.S. Department of Agriculture.

China, which in recent years has been increasingly assertive about protecting its economic interests, has not been afraid to use tariffs as a tool against the United States. In 2010, it said it would impose tariffs on U.S. poultry after its own anti-dumping investigation. China opened the investigation in 2009, less than two days after former President Barack Obama imposed steep tariffs on Chinese tires.

Despite Sunday’s announcement, Li, of Shanghai JC Intelligence Co., said that he believes the Chinese government “is still exercising restraint.”

“China still believes there’s room for negotiation,” he said, “and hopes that the United States will return to the negotiating table.”