US vineyards are on the verge of losing their foothold in one of the world’s fastest-growing wine markets as they find it hard to sell finding it hard to sell Syrah in Shanghai and Chardonnay in Shenzhen.
The 16-month tension between US and China has nothing to do with wines. It was generally about the US’s accusation of China stealing their technology and forcing American companies to hand over trade secrets and has slapped tariffs on more than $360 billion worth of Chinese imports.
China then retaliates as it hit backs on tariffs on US goods like American wine.
According to the Wine Institute, 93% tariffs and taxes on American wine was imposed by China since June. And unless the two countries will put an end to their trade tension, the levies on U.S. wine in China will ratchet up to 106% on Dec. 15.
Chinese levies amount to 41% on wines from the European Union and 23% on those from Australia, Chile and New Zealand.
Vice president of Livermore international sales, Michael Parr, expressed concern as they can no longer compete especially with countries that hold free trade agreements like Chile and Australia, whom they consider as their largest competitor.
Livermore is a California-based Wente Vineyards, one of the pioneer U.S. winemakers to export to China 25 years ago.
Parr revealed that Wente has not shipped a single bottle of wine to China since the latest Chinese tariffs took effect in June.
US wine exports to China have fallen 25% in 2018 according to the Wine Institute. Whole the U.S. Department of Agriculture shows figures just as ugly revealing that U.S. wine exports to China are down another 48% so far this year compared to January-September last year.
President of the Wine Institute, Robert Koch still sees China as an important market for California wines but admits that high tariffs puts their products at a disadvantage.
China has come out of nowhere to become the number 5 export market for US wine through its rapid economic growth and development. In 1994, US wine exports to China were barely registered.
About 95% of US wine exports are produced form the home to Napa Valley, California. China is among Wente’s top 10 export markets and undeniably, tariffs are hurting overseas sales. Parr added that its short term effect is loss of revenues that will eventually lead into lost opportunities.