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China to slap 15% import tariff on US wines in retaliation to Trump’s trade war

China has announced today that it is going to slap an extra 15% import tariff on American wine as part of its retaliation against the Trump administration’s decision on Thursday to levy tariffs on about US$50 billion worth of Chinese imports – at a time when US wine imports to China were just starting to blossom.

Chinese president Xi Jinping and Donald Trump

The Ministry of Commerce announced on its website today (23 March) that it plans to impose tariffs on US$3 billion worth of American products including American wine, as the first stage of retaliations in response to the American government’s decision to increase tariffs on Chinese steel and aluminum products, posing uncertainties for American wine exports to mainland China at a time when its export value saw a 10% increase last year.

The ministry said the trade sanctions would target 128 different American products in seven categories ranging from fruits and nuts, to pork and stainless steel pipes. Wine was among 120 products that would be the first to be hit with the 15% tariff. For the remaining products such as pork and recyclable aluminum, the country is going to impose a 25% tariff, it said.

The prospect of a trade war between the world’s two biggest economies has already sent shock waves through the stock markets, and the increase on American wine imports has leading wine importers on the mainland closely watching its development.

“China does not want to fight a trade war, but it is absolutely not afraid of a trade war,” the ministry said in the statement.

Treasury Wine Estates, the Australian wine giant that owns American popular brands such as Stag’s Leap, Beringer and BV Vineyards, was among the first to respond to the news, and expressed confidence that the two countries would be able to resolve trade tensions.

In response to dbHK, Peter Dixon, TWE’s managing director of Asia, Middle East, Africa and Global Travel Retail, commented: “We’re confident we can manage the impact of any geo-political issues of this nature in the ordinary course of business. TWE has been diversifying our sourcing footprint, introducing other country-of-origin portfolios such as our French portfolio, building on our Australian and American portfolios, to allow us greater flexibility to manage situations like this. We’ll continue to focus on growing our American portfolio across all of our priority regions, including Asia.”

Resonating with TWE, Yoshi Shibuya, CEO of ASC, in reply to dbHK, added: “ASC Fine Wines has an extensive portfolio of great wines from 16 different countries. We are confident it is sufficient to accommodate the
diversified needs of wine consumers in China. We hope and believe the current issue could be solved with great wisdom of the leaders of the both countries.”

This timing of the announcement nonetheless will create uncertainties for the wine trade between the two countries, with American wine exports (97% from California) to Greater China growing 10% by value to more than US$210 million last year.

Just a few days ago, when the California Wine Institute announced its trade figures for the past year, Christopher Beros, Wine Institute Trade Director for China and Pacific Rim, commented: “China has a rapidly growing middle class that is travelling outside the country and adopting many western tastes and lifestyle preferences. Consumption of imported wine has increased 2.5 times in the last five years on the Chinese mainland. We expect this trend to continue for the foreseeable future.”

dbHK has contacted the California Wine Institute for a response.

READ MORE: Trade Wars – a brief history of when booze gets banned

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