China is threatening to impose tariffs on U.S. ethanol imports in retaliation for President Trump’s tariff announcement, which is creating a new wrinkle in arguments to overhaul the nation’s ethanol mandate.
“China’s response was entirely predictable, given recent actions by our administration to implement new tariffs,” Bob Dinneen, head of the Renewable Fuels Association and top lobbyist for the ethanol industry, said Friday.
China is the third-largest importer of U.S. ethanol globally, as it plans to require ethanol in its fuel supply beginning in 2020. It is becoming a larger producer of ethanol itself and will increase ethanol production by as much as 500,000 tons this year.
China raised tariffs on ethanol imports in January 2017, but the renewable fuels group said that even with the tariffs, U.S. ethanol proved competitive in China and exports began to surge in the latter part of last year.
But now, China is threatening to raise the tariff to well above 30 percent, which would have the effect of shutting out foreign imports indefinitely.
Dinneen used the threat of Chinese retaliation to encourage the Trump administration to encourage increased demand for ethanol domestically.
“It is my fervent hope that the White House now fully understands the impact these actions will have on America’s ethanol industry and farmers, and we urge the administration to redouble its efforts to expand demand for ethanol here at home,” Dinneen said.
Trump is said to be weighing options for ending a standoff between the ethanol industry and oil refiners over the Environmental Protection Agency’s Renewable Fuel Standard about the high cost ethanol credits, or RINs. Sen. Ted Cruz, R-Texas, in meetings this month with Trump, pushed the idea of the EPA imposing a cap on the price of RINs. But the ethanol industry and its camp of pro-ethanol senators are opposing the idea, saying it would harm demand for ethanol.
Dinneen opposes any plan that would waive compliance with the RFS to help the refiners. The industry says the best plan is to encourage year-round blending of higher amounts of ethanol in the nation’s gasoline supply, which would lower the price. Agriculture Secretary Sonny Perdue said this week that Trump is unlikely to support the Cruz waiver proposal and would defer to Congress to overhaul the ethanol mandate.
“Unfortunately, over the last several months, EPA has been consistently and aggressively destructing biofuel demand,” he said. “That must stop, and meaningful action to expand biofuel demand must begin by allowing the year-round use of E15 nationwide.”
The ethanol industry and its defenders in the Senate have been pushing the EPA to relax rules that would allow the 15-percent blend of ethanol and gasoline to be sold year round.
Most gasoline across the country contains 10 percent ethanol. Relaxing the restrictions would stave off the need to ship ethanol abroad by providing a larger domestic market for the fuel.
EPA Administrator Scott Pruitt met Friday with more than 400 farmers and ranchers from Texas, Wisconsin, Kentucky, Georgia, and Pennsylvania, where the Renewable Fuel Standard was discussed.
