Chinese state media has threatened to impose tariffs on European Union wine, dairy, and aviation related imports in response to ongoing EU anti-subsidy investigations into Chinese companies.
If implemented, tariffs on the $1 billion+ annual imports of EU wine into China, approximately 70% of total wine imports into China last year, would drastically impact the current landscape of wine sales and consumption in China. It would also provide a notable opportunity for Australian wine to regain some of the market share it lost throughout its recently ended four years under tariff restrictions.
The warning was issued by the state-owned Weibo social media account Yuyuan Tantian (玉渊谭天), which is known for its political commentary and affiliation with state-owned CCTV. The Yuyuan Tantian cited “informed sources” to warn the EU that “China has ample countermeasures ready and will likely retaliate if the EU persists with its actions.”
Since the social media post was published, the European Chamber of Commerce in China has responded via a statement published in Bloomberg which highlighted the warning as being “significant” and suggested that “European wine and dairy products may find themselves caught in the crossfire,” similar to how Australia’s wine sector suffered as a result of a political squaffle.
While much-needed news for Australia’s wine industry, the lifting of tariffs on Australian wine imports into China on March 29 this year came with the warning that the Chinese market was unlikely to rebound to pre-tariff levels of Australian wine consumption.
According to Trade Monitor Data, all four of China’s current top wine import countries have been declining over recent years. In the 12 months up to December 2023, French wine imports fell by 29%, Chilean wine imports by 18%, Italian wine imports by 31% and Spanish wine imports by 48%.
Despite the fact that no other country’s wine imports have replaced the volume of wine previously supplied by Australia’s wine industry which in 2020 led by both volume and value, prior to today’s news of potential tariffs on EU wine imports, most critics thought it unlikely that Australia would be able to reclaim its previous market share.
Australian wine critic Jeremy Oliver recently told Drinks Trade why he thought it would take a significant amount of convincing to reestablish Chinese confidence in Australian wine.
“So the tariffs came in when Australia was selling (depending on which numbers you read) something like between $1.4 and $1.5 billion of wine to China per annum, and our next biggest export market at the time would have been the US at about $3.33 million, so [it was] nearly four times the size of our next biggest export market.
“My guesstimate based on a whole series of rational assumptions: we might be able to get that market back to about $250/$300 million or thereabouts; nothing like the $1.4/$1.5 billion.
“The two main reasons for that are one: that more than half what we were selling when we were selling that huge amount was sold via Chinese citizens seeking permanent residency in Australia and selling wine through their own networks back into China.
“Secondly, the China market: China itself is going through some very, very challenging economic times and that has had a massive effect on consumption.
“A lot of people have been given this false idea that everything will be back to normal, and that worries me because it’s an expectation that (and I really hope I’m wrong) I fear won’t even be close.”
For more information and insights from Jeremy Oliver, read this Drinks Trade article.
