U.S. wine industry fears long-term damage of tariff dispute

The U.S. wine industry has expressed concerns over the long-term damage of China's 15 percent tariff on imported wines from the United States.

Imported U.S. wines are on display at a supermarket in Hangzhou, Zhejiang Province. [File photo: IC]

China started imposing 15 percent additional tariffs on a total of 128 U.S. products, including wine, on the weekend in a retaliatory action against Trump administration's planned tariff on China's steel and aluminum. 

"This new increased tariff will have a chilling effect on U.S. wine exports to one of the world's most important markets," said Robert Koch, president and CEO of Wine Institute, on Monday. 

This additional tariff will increase the total tariff and tax paid on a bottle of U.S. wine imported into China by a large margin, according to the estimate of the Wine Institute, an advocacy and research group representing more than 1,000 wineries in California. 

Currently, Chile, Georgia and New Zealand wines enter China tariff-free and Australian wines will be tariff free starting in 2019, it said.

"The U.S. producers were already at a disadvantage to many foreign competitors, and this will only exacerbate that problem," said Koch. "We urge a swift resolution to this crisis before long-term damage is done to the U.S. wine industry." 

China is one of the fastest growing wine markets in the world and will soon be second only to the U.S. in value, according to the Wine Institute. U.S. wine exports to greater China (including the Chinese mainland and Hong Kong) were up 10 percent last year to 197 million U.S. dollars. 

The value of U.S. wine exports (97 percent from California) to China has increased 450 percent in the past decade.

The United States ranks as China's sixth biggest wine importer following France, Australia, Chile, Spain and Italy, accounting for around 3 percent of the country's bottled wine imports market, according to figures released by the Chinese customs.

China's tariff increases will impact approximately 2 billion dollars in U.S. food and agricultural exports to China. The majority of the products targeted are food and agricultural products, totaling 105 out of the 128 items.