According to a recent article in the Napa Valley Register, China has followed through on threats to raise tariffs on U.S. wines and a range of other American products, retaliating against the rate increases the Trump administration levied on steel and aluminum from China in March. The new retaliatory tariffs raise the rates on U.S. wines entering China by 15 percent, adding to pre-existing tariffs and taking the total levies paid on a bottle of American wine from 48.2 percent to 67.7 percent. “Wine is a luxury item, if you will, that the U.S. has become a real exporter of and mainland China is the fifth-largest export market for U.S. wines,” said Michael Kaiser, vice president of WineAmerica, a national trade association and public advocacy group representing wineries in all 50 states. “The fact that it’s become such a high-end good in China right now I think is one of the main reasons for (the tariffs),” Kaiser said. China’s growing taste for U.S. wines accounted for more than $80 million of American wine passing into the country last year, with the vast majority coming from California producers. A report last month from Wine Institute, the trade group for more than 1,000 California wineries, noted that consumption of imported wine in mainland China had increased 2.5 times in the past five years. In a statement issued after the tariffs took effect, Robert Koch, president and CEO of Wine Institute, said, “This new increased tariff will have a chilling effect on U.S. wine exports to one of the world’s most important markets.” With the pre-existing tariffs, American winemakers are already at a disadvantage when competing with other countries importing wine to China, Koch said, “and this will only exacerbate that problem.” Echoing that sentiment, the Napa Valley Vintners trade group said Tuesday, “This puts our producers at a further disadvantage for selling our wines in the China market and makes it even more difficult for consumers in that country to have access to our high-quality wines.” In particular, the newly added 15 percent tariff widens the gap between American wines and those from competitors in countries like Chile, New Zealand and Georgia, which enter China tariff-free. Wines from Australia will also be tariff-free in China by 2019.Scott Meadows is general manager at Silenus, a “small winery in Napa that, of course, employs proud Americans.” The winery sells 80 percent of its wine to export, Meadows said. “And of that 80 percent we probably sell 80 percent of that to China. So for us, it’s a huge problem.” The winery, which has been working in the Chinese market for eight years, currently has several ongoing contracts with distributors that were supposed to be completed at the end of last month, but have been put on hold because of the price increase, Meadows said. That said, check out the full line of our Stainless Steel Wine Drums here.
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