China's ministry of commerce said the import duty on US-origin denatured ethanol will rise to 70% on July 6 from 45%, as part of a wider retaliation to the US imposing import tariffs on Chinese goods.
Other agriculture products such as sorghum, soybeans and wheat were also subjected to the additional 25 percentage points import duty.
The higher import duty will keep the arbitrage window closed for the remainder of the year for exports of US fuel ethanol to China, trade sources said.
"With 45% import duties since April, arbitrage was already tightly shut With 70% now, this [US to China] trade flow is gone," a trader said.
Meanwhile, domestic prices in China have yet to react to the announcement as market participants were away on a public holiday on Monday.
The US is the largest supplier of ethanol to China, accounting for 85.8% of the 494,823 cu m imported by China in the first quarter.
