Do trade tariffs on wine continue to impact economy?
Team Veye | 22-Mar-2021
Australian wine exports to China had significantly risen in recent years to become an AUS$1 billion market. Trade was heavily exposed to the Chinese market, especially for premium reds.
This growth was seen as a threat to the development of the Chinese domestic wine industry and was thwarted through a protectionist anti-dumping move. The barriers, which will have a substantial effect on the Australian wine industry were driven by domestic factors as much as by bilateral relations.
China hit a range of Australian goods with punitive duties, in turn giving a boost to African suppliers. Ever since it slapped up to 212 percent tariffs on Australian wine, exports of South African wine to China have jumped 50 percent.
Despite the COVID-19 pandemic, wine exports had hit a record year-on-year value of $3.1 billion in the 12 months ended October 2020, before recording a steep decline in the final two months of the calendar year.
The decline in exports to China had been offset by significant growth in exports to Europe, up 22 percent to $704 million, the highest value in a decade. There was also growth in North America, up 4 percent to $628 million, and Oceania, up 11 percent to $115 million.
Wine businesses are resilient and are already adapting to these changed market conditions, increasing their engagement in markets other than China, particularly the UK, USA, Canada and the domestic market.
Although restrictions on Wine and other industries are quite disruptive, their impact on the overall Australian economy is less, much due to its $14 billion monthly trade in ores.
Whatever impact the Chinese sanctions are having is being offset by the realisation that they just have to buy our iron.
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