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China increases import duties on the ethanol imports from the U.S.

In what may seem as a retaliation to the U.S. move of slapping tariffs on the aluminum & steel products imported from China, the Asian superpower has levied 15% extra duties on the ethanol imports from the U.S. Reliable sources state that the tariffs are likely to be effective from 2nd April of this year.

This strategic decision of the Chinese government is aimed at neutralizing the price difference between the imported product and the domestically manufactured one. A key official of a private oil factory in China has announced that the firm will stop the import of the cost-effective ethanol from the U.S. and will consider purchasing the product from the domestic dealers of the compound.

The Chinese government’s decision to raise the tariffs on the ethanol imports from the U.S. is likely to encourage the regional ethanol manufacturers of the country, who are also supported by cost-effective corn production as well as incentives provided by the government. For the record, the current ethanol production in China is nearly 2.5 million tons per year. However, it has been speculated that demand for ethanol in the country is forecast to increase during 2019-2020. With the domestic suppliers not being able to fulfill the rising demand for ethanol, the country may have to import the product from outside, claim analysts.

The country’s authorities have also set a target of having all gasoline mixed with 10% of ethanol till 2020. The move is expected to resume the imports of ethanol from other countries as the domestic production of the compound is unable to meet the required demand. Earlier, the country had levied a 30% of tariffs on the ethanol imports from the U.S., which resulted in a decline in the overseas imports. The increase in the import duties however, are forecast to display a further decline in the overseas imports.

Dhananjay Punekar: