On March 22, 2018, Donald Trump, the President of the United States, signed a Presidential Memorandum against China, announcing a massive tariff on about $60 billions worth of goods imported from China and actions against China at the WTO.Subsequently, China’s Ministry of Commerce responded to the punitive tariff policy of the United States and issued a tax list on U.S. products, including wine, at midnight on April 1.
China suspended tariff concessions on 128 imported goods from the United States (part of the list).
China is the sixth largest importer of wine from the United States. In 2017 the wine the United States exported to China rose to US$197 million with 97% coming from California. California wine association chief executive officer Robert Koch said: China imposing retaliatory tariffs on American wine will place our producers at a disadvantage. Because of the signing of free trade agreements (FTA) between China and other countries, some competitors will soon have access to the Chinese market without the same challenges. With the condition of an additional punitive tariff on California wine, in the next few years California’s market share may fall, the United States will lose one of the world’s most valuable markets.
According to German finance net report, the wine Germany exports to the Chinese market last year was worth 19 million euros, which is far below the US$210 million in the same year for the United States. If the American wine industry is removed from the Chinese market, European and Australasian wine exporters will encounter huge development opportunities.
In addition, NPR reported that China signed a free trade agreement with Chile and Australia, which agreed that the exports of Australia and Chile to China would not be subject to tariffs. Kym Anderson, executive director of the wine economics research center at the University of Adelaide in Australia, told CNBC:” If American wine imports to China will be affected by high tariffs, so other suppliers, especially France and Australia, China’s two largest quality wine suppliers, will benefit directly.
Data released by Federation of French Wine and Spirits Exporters (FEVS) show that in the first half of 2017, the French wine and spirits of exports rose by 12%, to 6 billion euros. From a regional point of view, North America’s exports rose by 17%, while Hong Kong and Singapore’s exports rose by 18%. According to the latest export report from Wine Australia, as of December 2017, Australian wine exports to the world rose to 2.56 billion AUD, with exports to China rising 63 percent to 848 million AUD, accounting for 33 percent of global exports.
According to the export jointly issued by ANZ Bank and Deloitte, New Zealand wine exports totaled $1.66 billion in 2017(about 10.9 billion Yuan), attaining historic peak level. Since 2008, when China signed a free trade agreement with New Zealand, New Zealand’s exports to China increased dramatically. New Zealand wine is one of the fastest growing and healthiest products in the economic and trade relationship between the two countries.Thus, the U.S. trade war with China will undoubtedly hurt the interests of the American wine industry. And the wine industry in Europe, Australia and New Zealand will be the direct beneficiaries.
Collated by WABA institute,research based on material from Observer website