Australian Economy

Will the change of Australian government end the trade war with China?

Chinese wine importer Song Tian knows the cost of a trade war firsthand.

The Tianjing-based businessman, who used to sell 20,000 bottles of Australian wine a year to Chinese customers, had to quit importing from Australia altogether as the trade relationship between Beijing and Canberra soured.

In late 2020, China imposed so-called “anti-dumping” tariffs of up to 218 per cent on Australian wine, killing a market worth a billion dollars a year.

A man looks down at a wine bottle at an expo.
Song Tian says Chinese wine importers want to see the tension between Australia and China ease so that they can import from Australia again.(Supplied: Song Tian)

“It was too high, many other importers stopped buying Australian wines too,” he told the ABC.

“And they became too expensive for Chinese consumers.”

Mr Tian said the damaging tariffs forced many wine importers like him to look elsewhere for business, seeking alternative wine suppliers such as Chile and the US.

Economic damage goes both ways

Australian grape farmers and winemakers have also felt the pinch from the escalating trade tensions.

According to the data from Wine Australia, China was a $1.2 billion market for Australian wine in 2020.

However, the market value fell to just $24.2 million in March this year, plummeting 98 per cent from its peak.

Two glasses of red wine.
Around 10 per cent of national production was previously allocated for China.(Pixabay)

Last year, the Australian government took the trade dispute with China to the World Trade Organisation (WTO) and an independent panel has been appointed to try to resolve the issue.

Lee McLean from Australian Grape and Wine, the peak body of the wine industry, told the ABC that the tariffs imposed by China on Australian wine effectively made the market “unviable”.

“This has created a very significant imbalance in supply and demand for both wine and wine grapes, leading to sharp falls in grape prices in some parts of the country and an oversupply of wine on the market,” he said.

Other commodities — including barley, beef, timber, cotton, lobsters and coal — were also hit by crushing tariffs or trade restrictions.

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