Local producers at mercy of Chinese tariffs

Local producers at mercy of Chinese tariffs

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AUSTRALIA'S relationship with China, the world's most populous nation, has deteriorated even further in the past week.

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AUSTRALIA'S relationship with China, the world's most populous nation, has deteriorated even further in the past week.

While trade arguments are usually discussed and resolved behind closed doors through high-level diplomatic talks, the tension between China and Australia this week spilled over onto - of all things - social media.

A doctored photo of an Australian soldier posted from a Chinese official's Twitter account sparked a war of words, with our Prime Minister Scott Morrison calling for an official apology from China.

The social media spat came just days after China dealt our wine industry a huge blow, announcing its intention to apply tariffs of between 107 per cent and 212pc on Australian wine exports.

While wine is the latest in a long line of agricultural commodities to be the target of Chinese tariffs, the impact on our local wine industry could be nothing short of devastating, putting thousands of jobs at risk.

Just like barley, China is the number one export destination for Australian wine, with total exports worth a staggering $1.2 billion.

Australian wine organisations, state and federal governments and individual wine producers have worked tirelessly to build markets and increase the appetite for Australian wine in China - efforts that had proved incredibly effective. Just five years ago, Wine Australia figures showed China was our third most valuable export market, worth $280 million - well below its 2019 value.

All of these efforts have been undone, virtually overnight. While wine hasn't been banned, wineries will have little wiggle room to drop prices and remain profitable, and there will be a limit on how much Chinese consumers are willing to pay. After all, how many of us would be OK with the price of a product doubling or even tripling overnight?

Related reading:SA wine industry to feel pain of tariff tangle

It's hard not to be worried about what lies ahead. Who knows what sector will be effectively blacklisted next?

Frustratingly, it feels like there is little we can do. The government is considering taking China to the World Trade Organisation, but by all accounts this process is no quick fix.

This week's social media storm shows Australia is definitely on the nose in China.

Unfortunately, as more and more sectors find themselves the target of tariffs, it's likely to be Australian producers who lose out.

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