California wine industry slams additional Chinese tariffs as a "barrier to free trade"
California’s wine industry is facing further tariffs on its exports to China, as the trade war between the US and the Asian nation ramps up.
China has slapped an additional $60bn in tariffs on American goods a day after President Trump instituted additional sanctions on Chinese imports. Over 5,000 US goods will be subject to Chinese tariffs of between five to ten per cent, as from September 24th, including not only wine, but meat, crops and industrial materials.
However, the 10% additional tariff on wine disproportionately hits California, which accounts for 90% of US wine production. Chinese tariffs on US wine had already jumped from 48.2% to 67.7% back in April. The additional 10% tariff is on top of a previous 15% tariff increase implemented in April 2018. When compounded, the new total tax and tariff rate will equal 79%. Business groups, including the US Chamber of Commerce, have criticized the tariffs as a barrier to free trade that will affect consumers by raising prices.
“Contrary to views in Washington, China can — and will — dig its heels in, and we are not optimistic about the prospect for a resolution in the short term,” said William Zarit, chairman of the American Chamber of Commerce in China. “No one will emerge victorious from this counterproductive cycle.”
“There's nothing good that can come of these tariffs,” Michael Havens, an export broker at California American Terroirs in Sonoma told the San Fransisco Chronicle. “I don't know anybody ... who supports these tariffs,” he said. “If this same policy were to be extended to other countries, it would definitely have an impact on my business and my wineries.”
Despite the increase in tariffs Chinese demand for US wine has remained strong for the first six months of the year, with US wine exports to China jumping by 14% between January to June compared with the same period last year to $38.4 million in value, according to the Wine Institute.
“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, Wine Institute vice president of international marketing, in a statement.
"China continues to be an important market for California wines, but tariffs put our products at a price disadvantage,” added Robert P. “Bobby” Koch, president and CEO of Wine Institute. "We will continue our full slate of promotional activities there to engage Chinese consumers who are increasingly attracted to California wines. We are confident that the popularity of California wines will continue to grow.”
Last week, the American Chambers of Commerce in China and in Shanghai reported 52% of more than 430 companies that responded to a survey said they have faced slower customs clearance and increased inspections and bureaucratic procedures.
Last year China was California’s third largest export market behind Mexico and Canada, with more than $16.4 billion in exports, according to the International Trade Administration. US wine exports to all markets abroad reached $1.53 billion in winery revenues and 380 million liters (42.2 million cases) in 2017.
American wine exports to China and Hong Kong have grown 450% in the past decade and were up 10% to $197 million in 2017 and 34% to $118 million in the seven months through July 2018.