China targets US wine in tariff showdown
American wine has just gotten a dubious distinction: it features on a list of 128 items that may be subject to new Chinese tariffs. (spelling tip: tariffs ends in “FFS”!)
Saber rattling in trade between the US and China is escalating. The Trump administration announced $50 billion in tariffs on Wednesday and China responded yesterday with a more modest $3 billion. Of course, the two sides could be posturing and may come to an agreement before the tariffs hit the fan.
At any rate, wine featured on the list of items that would be hit with a 15% tariff into China. The US exports $79 million of wine to China, which seems like a drop in the Slavonian oak barrel of world trade. (Pretty small beer…) So even though it might sting in California, it is something of a backhanded compliment to US wine that it is seen as symbolically significant.
The US wine market is large and thirsty: by far the majority of wine produced in America gets consumed in America. California wine sold at retail fetched $35 billion in 2016. Beyond that, about a third of the wines consumed in the US are imported into what is a $60 billion market.
China is also a large and growing market for wine. As small as the US exports are to China, they were up a very healthy 47%. Australia, by contrast, with its small domestic market, has aggressively provided wine to the Chinese market. A new free trade agreement between the two countries means that Australian wine will have no tariff next year. France remains the largest source of foreign wine to China both in terms of value and volume.
On March 26th, 2018 at 8:01 am ,Terroirist: A Daily Wine Blog » Daily Wine News: New Tariffs on Wine wrote:
[…] Tyler Coleman also comments on the news that American wine is on the list of 128 items that may be subject to new Chinese tariffs. “The US exports $79 million of wine to China, which seems like a drop in the Slavonian oak barrel of world trade… So even though it might sting in California, it is something of a backhanded compliment to US wine that it is seen as symbolically significant.†[…]
On March 28th, 2018 at 4:10 pm ,Steve Howe wrote:
It will be interesting to what what the effects of the tariff war are. I’ve heard concerns that this might spike inflation. Hopefully, the effects are not drastic.
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On April 9th, 2018 at 10:24 am ,Jacob wrote:
I think they are not stupid, these tariffs can be not good for both sides. The US is the main importer from China. I hope they find an agreement before the tariffs hit the fan.
On April 12th, 2018 at 3:58 am ,Amber wrote:
It’s amazing to see the headlines and not realize how far reaching the ramifications are for this sort of thing, right? And, I am sure the Chinese would be just as happy to start buying more French or Italian wines if the CA ones become too expensive.