Shots Fired: China Slaps “Distressing” Tariffs Up To 212% On Australian Wine

Shots Fired: China Slaps “Distressing” Tariffs Up To 212% On Australian Wine

Tyler Durden

Fri, 11/27/2020 – 20:30

China has drastically ramped up its trade conflict with Australia, on Friday slapping a whopping 200% tax on all Australian wine, in a move being widely described as the first shot fired in what went from behind-the-scenes bureaucratic punitive actions to now an open trade war.

“The Ministry of Commerce imposed import taxes of up to 212.1%, effective Saturday, which Australia’s trade minister said make Australian wine unsellable in China, his country’s biggest export market,” the AP reports. The lead industry body Wine Australia, said the country’s total shipments to China in the first nine months of 2020 accounted for 39% of all Australian wines.

Australia has been among those countries, foremost among them the United States under Trump, leading the charge of criticism aimed at Beijing over its handling of the coronavirus pandemic, lately calling for a formal international probe into the deadly virus’ origins there. 

China is the top market for Australian wine exports, via Reuters.

“This is a very distressing time for many hundreds of Australian wine producers, who have built, in good faith, a sound market in China,” Australia trade minister Simon Birmingham responded on Friday.

The growing tensions between the two trade partners has also included tit-for-tat travel restrictions and in a couple notable cases the detention of journalists with dual nationality by Chinese security services. This amid China taking measures early this month to block a wide array of key Australian exports from lobsters to coal.

But as one analyst cited by AP has observed of what’s increasingly obvious, Australia has become a “one-trick pony export-wise to China” and thus Beijing holds all the cards, with Canberra scrambling to play on the defensive while China extracts political concessions by threatening to torpedo Australia’s commodities exports.

China’s Ministry of Commerce justified the wine tariffs as a necessary response after rampant complaints that Chinese producers were hurt by improperly low-priced Australian imports.

Prime Minister Scott Morrison has lately slammed Beijing practicing blatant “economic coercion” with regard to an increasing array of its exports being held up at port for what are seen as contrived inspections procedures, which sometimes end in large shipments going bad, such as lobster. 

Beijing has also recently began taking aim at Australia’s tourism industry by discouraging tourists and students from visiting the country.

Via Trading EconomicsAustralia exports to China was US$103 Billion during 2019, according to the United Nations COMTRADE database on international trade. 

On news of this latest 200% wine tax Australia’s main stock market index fell by 0.5%. China’s foreign ministry was quick to capitalize by demanding Australia “do something conductive” to change course and improve relations but without diving into details:

“Some people in Australia adhering to the Cold War mentality and ideological prejudice have repeatedly taken wrong words and deeds on issues concerning China’s core interests,” said the spokesman, Zhao Lijian.

Australia should “take China’s concerns seriously, instead of harming China’s national interests under the banner of safeguarding their own national interests,” Zhao said.

Further fueling China’s dramatic actions is Australia’s impending mutual defense treaty with Japan which is still being deeply negotiated.

Japan is of course a prime strategic rival to China heavily involved in pressing anti-China rhetoric on its expansion of militarized artificial islands in the South China Sea. 

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Author: Tyler Durden