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Californian wine producers urge Trump to stand down on China

Published:  04 April, 2018

Californian wine producers are braced for a slide in sales to China as trade relations between the country and the US continue to deteriorate.

The Chinese authorities have announced plans to increase the total tariff and tax paid on a bottle of wine imported from the US from 48.2% to 67.7%. Other US imports face duty hikes of between 15% and 25%. The move is seen as a retaliation to President Trump’s decision to raise duties on Chinese steel and aluminium imports and limit China’s investments in the US.

The US is the sixth biggest wine importer to China, having shipped 9.6 million litres with a value of $75.6m to the country in 2017 [Chinese General Administration of Customs]. China is expected to overtake the UK to become the world’s second biggest wine market after the US by 2021, with sales projected to rise by 40% to around £23bn [IWSR].

The US stands to miss out on this opportunity, said John Aguirre, president of the California Association of Winegrape Growers, in a statement. “President Trump’s decision to address US trade issues by use of threats and increased tariffs risks undoing decades of work and investment to grow California wine exports,” he said.

“I urge President Trump to return our nation to a strategy of opening markets and resolving trade concerns through multilateral negotiations, like the Trans Pacific Partnership. The current path of tariffs and trade wars is sure to result in tremendous harm to California agriculture and future wine exports.”

Some say a trade war between the two countries will benefit other wine producing regions. In 2019, Australia will begin importing wines to China tariff free. Australia was the second largest supplier of wine to China in 2017 after France, having shipped 105.7 million litres at a value of $682.4m.

Chile and New Zealand, the third and seventh biggest importers to China, are not subject to tariffs and only pay a 30% combined tax rate, according to the Wine Institute. President and CEO of the organisation Robert Koch told Reuters: “US producers were already at a disadvantage to many foreign competitors. This will only exacerbate that problem.”