HENNEPIN — Tariffs imposed by China's government Thursday will have a significant effect on Illinois ethanol producers and the farmers who supply corn to create the fuel.
China's Ministry of Commerce on Tuesday announced a final ruling on punitive tariffs for dried distillers grains that raised the combined total to more than 80 percent after preliminary combined tariffs of more than 40 percent were instituted in September.
The increase took effect Thursday, the same day as a previously announced Chinese ethanol tariff hike from 5 to 30 percent.
“These tariffs are the poster child of bad trade deals,” said Mark Marquis, CEO of Hennepin-based Marquis Energy, the largest dry-mill ethanol facility in the nation with an ethanol production capacity of 1 million gallons per day.
Ethanol distilleries such as Marquis and Archer Daniels Midland will suffer twice from the tariffs — dried distiller grains are a byproduct of the ethanol production process, used as a high-protein livestock feed. China has been the top importer of U.S. dried distiller grains.
"The true impact is yet to be seen, because we're going to have to wait and see how much prices soften," said Mike Doherty, senior economist with Illinois Farm Bureau. "This is not good news."
The Ministry of Commerce began an investigation of U.S. ethanol and dried distiller grain production and subsidies about a year ago, including a trip to the Marquis plant, and concluded through the final ruling that U.S. subsidies harmed domestic Chinese ethanol and dried distiller grain producers.
The preliminary tariff from September already is subject to a World Trade Organization complaint from the Office of the United States Trade Representative. Marquis said that complaint may take years to resolve and urged President-elect Donald Trump's administration to take up the issue directly with Beijing.
Tom Sleight, president and CEO of the U.S. Grains Council, said in a statement that the trade group was disappointed in the "severe departure" from three decades of cooperation with China's government and livestock industry.
"Protectionist trade restrictions based on false allegations do not benefit either China or the United States and represent a threat to a global trading system that has promoted consumer welfare and jobs around the world while lifting millions of families out of poverty," Sleight said.
Matt Buedel is the Journal Star business reporter. He can be reached at 686-3154 and firstname.lastname@example.org. Follow him on Twitter @JournoBuedel.