China will impose up to 212% tariffs on Australian wine starting Saturday as part of its anti-dumping measures.
However, China said these tariffs were only temporary anti-dumping measures to prevent subsidized imports of Australian wine. According to the Chinese commerce ministry, the duties will range from 107% to 212%.
These new measures is expected to further the existing tension between the two nations.
China's dumping claims on Australian imports
In the past few months, the Chinese government has been placing Australian imports into its crosshairs, such as coal, sugar, barley and lobsters, amid political disagreements between the two countries.
According to China, Australia has been able to sell its wine at a cheaper price in China, compared to its domestic market through the use of state subsidies. Australia denied the allegation.
A year-long probe is being conducted by the Chinese government into anti-dumping, observing wines being sold in China, whose prices are allegedly lower than local prices in Australia.
Australia's wine exports to China comprise around 39% of the total wine exports for the first nine months of 2020, according to a report by Wine Australia.
Following the announcement of the tariffs, shares of Treasury Wine Estates (TWE), one of the biggest winemakers in the world, fell by more than 13%. This is because the maker of Penfolds and Wolf Blass wines is considered a powerhouse business selling into China.
After six years of continuous growth, TWE's business in China is worth an estimated $3 billion. Aside from TWE, the Chinese commerce ministry also named several Australian winemakers, including Casella Wines and Australian Swan Vintage.
China did not specify the duration of these temporary anti-dumping measures.
Australia's reaction to the Chinese tariffs
In response to China's announcement, Australia's agriculture minister David Littleproud tweeted: "Australian Government extremely disappointed in Chinese decision to impose preliminary tariffs on Australian wine."
The minister said: "The Australian government categorically rejects any allegation that our wine producers are dumping product into China."
"Australian wine is hugely popular both in China and across the globe due to its high quality and we are confident that a full and thorough investigation will confirm this," Littleproud added.
Meanwhile, Australia's trade minister Simon Birmingham pointed out that the newly imposed tariffs would make Australian wine unviable and unmarketable in China.
He explained: "This is a very distressing time for many hundreds of Australian wine producers, who have built, in good faith, a sound market in China."
Birmingham said he is considering taking the matter with China to the World Trade Organization (WTO).
Political tension between the two countries intensified after Australia's decision to support a global inquiry into the origins of the coronavirus in April. In the process, a Chines diplomat said Australia effectively singled out China.
As a response, China has been giving extra focus on Australian imports while students and tourists from China have been warned against travelling to Australia citing fears of racism.
"I don’t know where the Australian leader’s so-called reference to coercion is coming from, and why are ‘values’ being pulled into this too?" she said.
"As for discrimination and violence in Australia, it has been widely seen in Australian media and online for some time, and China’s embassy in Australia has received a lot of complaints and requests for help. If the Australian side is not even willing or too scared to admit these truths, then I don’t know where this so-called confidence is coming from?" the spokeswoman added.
