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U.S. wine now faces 91 percent tariff in China

Latest round makes it even more difficult to compete, industry complains.

After trade talks between the two nations crashed and burned this month, China’s latest round of tariffs against U.S. products put another hit on wine, which will soon face a 91 percent duty in the Asian nation.

Beginning June 1, China will add another 15 percent tariff on U.S. wine imports to the country. That tariff is in addition to a 15 percent increase implemented in April 2018 and another 10 percent added in September.

The compounding tariffs make it harder for U.S. wines – 90 percent of which are from California – to hold market share against wines from other countries, says Robert Koch, president and chief executive officer of the San Francisco-based Wine Institute.

“This is the third Chinese tariff increase on U.S. wine in the past 14 months, and with each additional round, it becomes more and more difficult to compete in the fastest-growing wine market in the world,” Koch says.

China will soon be second only to the U.S. in total value of wine sales, according to the Institute.

“It is imperative to resolve this dispute as soon as possible, so that our wineries do not suffer long-term market loss,” he says. “Despite these challenges, the California wine brand remains strong with Chinese consumers and we are committed to doing everything we can to ensure this does not change.”

Sales to China down

U.S. wine exports to China and Hong Kong have grown 450 percent in the last decade, but sales to China were down 25 percent in 2018 as exports to all markets abroad reached $1.47 billion in winery revenues and 41.7 million cases, the Institute reports.

The latest tariffs come after the U.S. moved tariff rates on $200 billion in Chinese products from 10 percent to 25 percent, intended to apply additional pressure to ongoing negotiations. In all, China put new retaliatory tariffs on $60 billion in U.S. goods.

To shore up the Chinese market, the Wine Institute’s California Wine Export Program team in China has been holding educational "master classes" in cities throughout the Asian nation. A vintner tour in October included stops in Hong Kong, Macau, Guangzhou, Shanghai, Chengdu, Wuhan, Taipei and Tokyo. The group also made a strong presence at the ProWine China trade show in Shanghai in November and at the Tang Jia Hui Trade Show in Chengdu in March.

The Wine Institute is a public policy advocacy association representing nearly 1,000 California wineries and affiliated businesses, which are responsible for 81 percent of U.S. wine production.

The industry also contributes $114 billion annually to the U.S. economy and create 786,000 jobs across the country, including 325,000 in California, according to a news release.

For more news on pests, disease management and other issues affecting vineyards, subscribe to the bi-monthly newsletter The Grape Line.

TAGS: Trade
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