Report: Ships carrying US sorghum stuck at sea after China imposes tariffs

Report: Ships carrying US sorghum stuck at sea after China imposes tariffs
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Several China-bound ships carrying U.S. sorghum exports have changed course since China's government announced a new tariff targeting the U.S. grain industry this week.

Reuters reports that 20 ships carrying more than 1.2 million tons of U.S. sorghum are currently at sea, with at least five of them announcing new courses after China's government announced a new tariff on sorghum Tuesday morning.

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The grain on board the 20 ships is valued at more than $216 million, but China is now forcing grains handlers to pay a 178.6 percent tariff of the value of the shipments as a deposit upon arriving.

U.S. sorghum is relatively cheap in China due to artificial price inflation, which experts say allows the country to target a U.S. export from typically red states. China started mass importing sorghum in 2014 as a result of inflated grain prices set by China's government.

China announced the tariff on sorghum this week alongside an action meant to free up restrictions on U.S. auto exports, a decision that could benefit U.S. auto companies that do not already have a footprint in the country.

Trade analysts told Reuters that tariffs targeting U.S. grain shipments could lead to an escalation of the back-and-forth tariffs that the U.S. and China have rolled out in recent weeks.

“For their overall trade businesses, this is not that substantial. But it’s a warning,” Bill Densmore, senior director of corporate ratings at Fitch Ratings, told Reuters. “If China really does start slapping tariffs on everything, like soybeans and corn, things could get really ugly, really fast.”

Tom Sleight, president of the U.S. Grain Council, reacted to China's most recent tariff by calling for an end to the Trump administration's escalating tough talk aimed at China's trade policies.

“This tit for tat has to stop, and talks to find reasonable and lasting solutions must begin, for the good of U.S. agriculture and the customers we have spent decades working to win as loyal buyers,” he said.