News Special Coverage Industry Overview Supply & Demand Price Reference Forum
 

California wine among $60 billion in US goods hit by new China tariffs

www.sfchronicle.com by Roland Li and Sophia Kunthara28/09/2018  

66.jpg

China is tacking $60 billion in additional tariffs on U.S. goods a day after President Trump instituted additional sanctions on Chinese imports, intensifying the trade war between the world’s two largest economies.

More than 5,000 U.S. goods will be subject to Chinese tariffs of from 5 to 10 percent starting Sept. 24, including meat, crops, industrial materials and wine. The 10 percent additional tariff on wine disproportionately hurts California, which accounts for 90 percent of U.S. wine production. Chinese tariffs on U.S. wine had already increased from 48.2 percent to 67.7 percent in April.

China and the U.S. already imposed tariffs on $50 billion worth of each other’s goods before Trump said Monday that another $200 billion in Chinese products would be subject to new tariffs. Trump threatened to add tariffs on an additional $267 billion in Chinese imports if China retailiated. That would mean the imposition of tariffs on nearly all products that China sells to the U.S.

Business groups, including the U.S. Chamber of Commerce, have criticized the tariffs as a barrier to free trade that will hurt consumers by raising prices.

“Contrary to views in Washington, China can — and will — dig its heels in, and we are not optimistic about the prospect for a resolution in the short term,” said William Zarit, chairman of the American Chamber of Commerce in China. “No one will emerge victorious from this counterproductive cycle.”

Bay Area businesses also said they opposed the tariffs.

“There's nothing good that can come of these tariffs,” said Michael Havens, an export broker at California American Terroirs in Sonoma, which works with 93 West Coast wineries.

Havens personally doesn’t do business in China, but said Californian wineries he’s spoken to have all opposed the tariffs.

“I don't know anybody ... who supports these tariffs,” he said. “If this same policy were to be extended to other countries, it would definitely have an impact on my business and my wineries.”

Despite a steady escalation in tariffs, Chinese demand for wine has been strong over the first half of the year. U.S. wine exports to China jumped 14 percent in January through June compared with the prior year to $38.4 million in value, according to the Wine Institute.

“While increased tariffs are challenging, Chinese consumers are clearly attracted to California wines and appreciate the high quality and great diversity of wines from the Golden State,” said Linsey Gallagher, Wine Institute vice president of international marketing, in a statement last week.

The Wine Institute holds promotion events for California wine in China, including classes, and plans to have a “strong presence” at the wine trade shows in the cities of Shanghai and Chengdu in the next few months.

Last week, the American Chambers of Commerce in China and in Shanghai reported 52 percent of more than 430 companies that responded to a survey said they have faced slower customs clearance and increased inspections and bureaucratic procedures.

In 2017, China was California’s third largest export market behind Mexico and Canada, with more than $16.4 billion in exports, according to the International Trade Administration.

Tariffs on Chinese goods in the U.S. will raise prices for consumers. There are already signs of such an impact.

Luggage maker Samsonite notified wholesale buyers in an Aug. 13 letter that there would be a 10 percent price increase if the U.S. added more tariffs on Chinese goods, Bloomberg reported. The tariffs will take effect Sept. 24 and affect more than $3 billion in luggage and travel bags imported from China.