China’s tariffs on Australian wines are essentially “closing the market,” the exec trading group says

Tony Battaglene, executive director of the Australian National Association of Grape and Wine, said Beijing’s decision last week to impose a duty of up to 212% on Australian wine imports on Australian wine imports jeopardized business ties with China.

Battaglene is working with about 800 Australian wine producers who have built their “business” around exports to China and now have no contingency plans, he added.

“We were surprised, shocked,” Battaglene told CNN Business. “By the extent of these temporary tariffs, I mean that they are essentially closing the market to Australian bottled wines, premium wines in China. There is no way we can compete at this level.”

The Chinese Ministry of Commerce announced on Friday that it had made a decision after finding preliminary evidence of dumping. Australian officials bitterly protested the move, saying China could not provide evidence.
The wine war is taking place against the backdrop of a wider deterioration in relations. Australia has annoyed China by calling for an investigation into the origins of the coronavirus epidemic. Later, Beijing targeted Canberra for trade, namely by suspending certain imports of beef and hitting heavy tariffs on barley.
China imposes a duty of up to 212% on Australian wine imports

The ribs that went into effect on Saturday forced businesses to scramble. Following the announcement, some container vessels bound for mainland China had to return to Australia, according to Battaglene.

“Orders are canceled, orders are suspended,” he said. “No one is willing … to charge extra import duties just to be through the duties. In essence, the market will be closed to us.”

Australia’s leading winemaker on Monday, Treasury wine estates (TSRYF) (TWE) announced a contingency plan. He said he would start redirecting from China to other markets such as the United States, Europe and other Asian countries after learning that his products were subject to 169.3% tariffs.

CEO Tim Ford says he is considering relocating TWE wines once they have arrived at a port in Shanghai. “We are revaluing [what to do with] this product, “he said in an analyst call on Monday.

“We are extremely disappointed to find our business, our partners’ businesses and the Australian wine industry in this situation, ”Ford added. “Our focus is clearly on building our business outside of China in the next period.”

The plan was not enough to reassure investors. Shares of TWE closed 6.9% in Sydney on Monday, after falling 11.3% on Friday when tariffs were announced.

How the “huge ocean of goodwill” between China and Australia has become sour
China is by far the largest importer of Australian wine, says Wine Australia, a trade organization backed by the country’s government. In the most recent fiscal year, which ended in September, China alone accounted for 39% of Australia’s total wine exports by value, the group said.
In the future, several “Australian winemakers will be forced to consider alternative markets for export sales,” the Australian grape and wine statement said.

On Monday, Ford called on the Australian government to help businesses find a solution.

“Leaving it unresolved will have a significant impact,” he said. “Things can change, and we’re dealing with changes, but we’re dealing somewhat with cards we know right now, without a strategy of hope, if you like. It’s a very smart strategy.”