On Monday, October 23, the U.S. Department of Commerce issued a statement announcing that it would move to place anti-dumping duties on Ethanol imported from Indonesia and Argentina, finding that exporters from these countries sold their products at high dumping rates of 50.71% and 54.36%-70.1%, respectively. US imports of Indonesian and Argentinian biofuels in 2016 were valued at $268 million and $1.2 billion, respectively. Defined as the amount by which normal value of the product exceeds the exported goods sticker price, “dumping” has been extremely problematic for the United States. Companies in these countries purposefully sell their product at a loss to gain market share. Once they obtain a monopoly, these companies can raise the price to absurdly high levels.
“The Trump Administration is committed to both free and fair trade and will defend American workers against unfair trade practices…Still, we are thankful to the Government of Argentina for their proactive approach to solving this issue, and remain optimistic that a negotiated solution can be reached both with Argentina and with Indonesia,” said Secretary of Commerce Wilbur Ross.
The US Corn Lobby has been asking Trump to place protective tariffs on Ethanol throughout the fall. This recent move was petitioned by the National Biodiesel Fair Trade Coalition, a group composed of 15 domestic biodiesel producers.
What is surprising about this move is that corn growers have mostly targeted their efforts against Brazilian sugarcane ethanol, something that this tariff does not touch. It should be noted, however, that the department of Commerce began considering applying these duties since the last week of August. Since then it has also been simultaneously negotiating with the Argentinian Government to bridge this impasse.
The Press Release given by the Department of Commerce stated “The vigorous enforcement of U.S. trade laws is a priority of the Trump administration”. Since the Inauguration, 73 antidumping and countervailing duty investigations have been launched by the administration. In the same period in 2016, only 48 such investigations were launched. Currently the administration has 412 anti-dumping tariffs in place. This is consistent with the Trump Administration’s goals of being tougher on importers.
While the administration has yet to label China as a currency manipulator, the grand centerpiece in the Trump Fair-Trade Agenda, smaller moves like this indicate the priority the administration is placing on targeting unfair trade practices. While these types of move will not make headline news, they do reach the Midwestern voters that the party will have to keep to maintain its Congressional majorities. This recent anti-dumping tariff will please the corn lobby, one of the most powerful forces in Washington. As a whole, it donated $10, 877,455 to Presidential and Congressional candidates in election cycles from 2008-2014. While no Iowa senators are up for election in 2018, donations and support from the Corn Lobby could be what decides the fate of Republican house members in the state. In what is looking to be a tight midterm election, the Trump administration will have to use every trick in its arsenal to please the voters and donors it needs to win next year.