The current rate of taxation on American wine – post the latest retaliatory tariff imposed by China on United States products is as high as 93 per cent. This extremely high rate of import tariff has put the product out of the growing affluent middle class of the second largest economy of the world.

Tom Hinde, the president and winemaker of Yao Family Wines, installed by the Hall of Famer in 2011, noted in an interview with news outlet Aljazeera that its export of wine dropping by 50 per cent in just the last one year.

The tariff dispute between the US and China now threatens to upend the relationships that have been painstakingly built by California vintners for years with Chinese importers. The impact on the vintners clearly shows how the tariff war of US president Donald Trump has created an impact.

“There’s indecisiveness in the outcome, so that puts a pall over the buyers’ enthusiasm,” Hinde said. “We’re hurting ourselves.”

The San Francisco-based Wine Institute, an advocacy group for California’s wine industry said that compared to a year earlier, in 2018, there was a drop of 25 per cent in the value of US wine exports to China. The tariff war started in June of 2018. The majority of the decline has been borne by the state that is responsible for more than 90 per cent of all exports of American wine.

And despite China being the fifth-largest importer of wine, analysts feel that there is plenty of scope for growth of the business in the Chinese market. If the tariffs persist, it would upend the years of work that have been put into cultivating business in China by vintners and American wine would become too expensive for Chinese consumers to purchase. And therefore it would not be easy for business to immediately get back to its pre-tariff form even if the tariff regimen is removed.

“It’s not like we’re selling socks and we’re suddenly back on the shelf,” said Emma Swain, chief executive officer at St. Supéry Estate Vineyards and Winery in Napa Valley. “Regaining consumer confidence takes time.”

The higher price per bottle that a consumer in China has to now shell out is because of passage of the higher tariffs to the next by different layers of people in the supply china. The chain includes the Chinese importers of wine, the distributors; and lastly the retail stores or restaurants selling them to the end user. But this chain activity is often not understood by the end consumer.

If there is lingering of the US-China trade war, “we’re going to have open other markets around the world,” said Anthony Hsu, CEO of Maxville Winery in Napa County’s Chiles Valley, a region which has seen a drop of almost 50 per cent in wine exports in just the last 10 months. The company is now seeking out new export markets in Vietnam and Thailand for increasing sale.

“People aren’t going to stop drinking wine in China because the U.S. and China have a tariff dispute,” Hinde said. “It would be nice if we can wrap this thing up and we can all go back to our business as normal.”

(Adapted from Aljazeera.com)

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