Trade war puts cork in US wine sales to China

Cabernet Sauvignon wine grapes almost ready for harvest are held at Wente Vineyards in Livermore, California. American wine producers are being squeezed out of the fast-growing Chinese market, thanks to United States president Donald Trump’s trade war with China. Since the trade dispute began last year, China has raised tariffs on American wines three times in retaliation for United States’ tariffs on Chinese goods.
Cabernet Sauvignon wine grapes almost ready for harvest are held at Wente Vineyards in Livermore, California. American wine producers are being squeezed out of the fast-growing Chinese market, thanks to United States president Donald Trump’s trade war with China. Since the trade dispute began last year, China has raised tariffs on American wines three times in retaliation for United States’ tariffs on Chinese goods.

LIVERMORE, California – Caught in the crossfire of President Donald Trump’s trade war with China, vineyards in the United States (US) are struggling to sell Syrah in Shanghai and Chardonnay in Shenzhen. They risk losing their foothold in one of the world’s fastest-growing wine markets.

The 16-month dispute between the world’s two biggest economies has nothing to do with wine. The Trump administration accuses China of stealing US technology and forcing American companies to hand over trade secrets and has slapped tariffs on more than $360 billion worth of Chinese imports. China disputes the allegations.

When the Chinese hit back with retaliatory tariffs on US goods, they put a bull’s eye on American wine.

Since June, China has been imposing 93 percent tariffs and taxes on American wine, up from 48 percent before the hostilities began, according to the Wine Institute, a trade group for 1,000 California wineries and related businesses. Unless the two countries reach a ceasefire – and they’re working on it – the levies on US wine in China will ratchet up to 106 percent on Dec. 15.

By contrast, Chinese levies amount to 41 percent on wines from the European Union and 23 percent on those from Australia, Chile and New Zealand.

“We could no longer compete, especially with countries with free trade agreements like Chile and Australia, our two largest competitors,” said Michael Parr, vice president of international sales at Livermore, California-based Wente Vineyards, one of the first US winemakers to export to China 25 years ago.

Parr said that Wente has “not shipped a single bottle of wine to China’’ since the latest Chinese tariffs took effect in June.

Overall, US wine exports to China fell 25 percent in 2018, measured by volume, according to the Wine Institute. Calculated by dollars, the picture is just as ugly: US Department of Agriculture figures show that US wine exports to China fell 25 percent last year to $59.2 million and are down another 48 percent so far this year compared to January to September 2018.

“China continues to be an important market for California wines, but exceptionally high tariffs put our products at a price disadvantage,” said Robert Koch, president of the Wine Institute.

Over the past 25 years, China’s rapid economic growth has created a middle class with a taste for luxuries and the country has come out of nowhere to become the No. 5 export market for US wine. In 1994, US wine exports to China barely registered at $123,000. From there, they rose mostly steadily, peaking at $81.5 million in 2016 then dipping to $78.7 million in 2017 before plunging last year after the tariff war broke out. (AP)

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