NEWS
TRADE WAR CONTINUES: AMERICAN WINES TO FACE 98% TAX IN CHINA
By Siulan Law Mathews DipWSET
14-5-2019
American wine producers are to be hit again as China announced retaliatory tariffs on USD60billion worth of American goods including wines effective from 1 June. The new total tax bill for imported American wines in China will rise to 98%.
The list of American goods published by China’s Ministry of Finance yesterday, in response to President Trump’s punitive tariffs on USD200billion worth of Chinese goods last Friday, was dominated by agricultural products. Among them are wine, beer, gin, agave and other distilled spirits.
California wine producers are set to be severely affected, the state is responsible for some 90% of American wine exports.
The Wine Institute, California’s wine trade body, warned of a long-term market loss if the dispute between USA and China is not resolved.
“Effective June 1, China will add another 15% tariff on U.S. wine imports to their country. The additional 15% tariff is on top of a previous 15% tariff increase implemented in April 2018 and another 10% increase in September 2018. When compounded, the new total tax and tariff rate will be 98%,” said the Wine Institute.
The organisation’s President and CEO Robert Koch said this is the third Chinese tariff increase on U.S. wine in the past 14 months, and with each additional round, it becomes more and more difficult to compete in the fastest-growing wine market in the world.
The pro-longed trade war has already taken its toll on American wine export to China. The trade declined by a whopping 25% by value to USD59 million last year. There is no sign it will recover soon in this on-going trade war between the world’s two biggest economies.
In China, some importers are predicting that American wines will disappear in the entry level to mid-priced markets because consumers in these sectors are more price-sensitive.
However, they also predicted that American fine wines will remain resilient in the China market because of the much lower price-sensitivity of the consumers in that sector.
(the writer can be contacted at: SLawMathews@thewinechronicle.com)
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