Amid news that U.S. wine export to China increased 14% in value in the first half of this year despite the trade war, China announced that it would levy an additional 10% punitive tariff on U.S. wines from next week to retaliate President Trump's latest move.
The additional 10% tariff is on top of the previously announced 15%, adding the 14% normal tariff, American producers will face a whopping 39% in import duty alone when exporting to China.
According to the San Francisco-based industry advocacy group the Wine Institute, U.S. wine exports to China seemed to have held up in the first half of this year despite the trade war, rising 14% in value and 1.04% in volume. These compared to worldwide growth is 2.7% in value and 1.7% in volume.
“While increased tariffs are challenging, Chinese consumers are clearly attracted to California wines and appreciate the high quality and great diversity of wines from the Golden State,” said Linsey Gallagher, vice president of international marketing of the Wine Institute, in a statement.
However, the new punitive tariffs will cast doubts on how well U.S. wine exports to China can hold up in the months to come.
When the steep 39% import duty becomes effective next week, adding the existing VAT and excise taxes on all imported wines, American producers will be subject to about 80% total taxes, much higher than the 48% faced by other countries.
Worse still, new world producing countries like Australia, New Zealand and Chile, which are Californian wines major competitors in the China market, are now enjoying tariff free status because of the free trade agreements between their governments and China.
China, including Hong Kong, was the third-largest market for U.S. wine exports last year by value and volume, after the European Union and Canada.
Total U.S. wine exports to China already trended downwards last year at USD78.7 million, down 3.45% from 2016. In volume it was 1.65 million cases, down by 4.51%.
Though the trade has held up reasonably well in the first half of this year despite the trade war, with the new punitive tariffs, it would be difficult to stay optimistic about further growth in the months to come.
(the writer can be contacted at: DavidMa@thewinechronicle.com)