Tariffs and wine

With the opening salvos of the China trade war upon us, I’m wondering if anyone has considered the fallout from a 25% tariff on US wines? Besides the obvious negative implications, could this increase prices for US consumers of European wine, assuming Chinese demand shifted there? Opinions?

Know what the current Chinese tarrif already is?

Start there.

Shipping into HK (in the past), no tariff.

Could this mean more US wines stay in the country?

It really depends on how new rules apply to HK. Big $$$ wines were going through HK, while I’m not sure what the higher volume (lower $) guys are doing. If HK remains wide open it won’t have much effect on the collectibles market in the US.

Absolutely unpredictable.

Likely no impact on my part of the hobby, other than uranium levels in west coast grapes.

Time to go long on wineries with affiliation to Goldman Sachs.

There was a long NY Times story on it this issue on Tuesday: “China’s imports of American wine reached $82 million last year — not including bottles entering duty-free through Hong Kong — a sevenfold increase in the last decade.”

That’s not a big number.

The story tells the story of Honig Vineyard, which sells 500 cases a year to China.

[Michael Honig’s] most popular cabernet goes for around $25 a bottle wholesale, and he sends more than 500 cases of it every year to a plucky Shanghai importing business started by two brothers with dual citizenship. With existing tariffs and value-added taxes mixed in, the total charge tacked on to California wine was already close to 50 percent. After the importer factors in shipping, takes its cut and passes the bottles to a hotel or retail store, which takes its cut, the Napa red ends up selling for the equivalent of around $100.

… Chilean and New Zealand wines face no Chinese levies, thanks to free-trade agreements. Australian bottles will enter the country tariff-free next year.

Larry Yang, an importer in Shanghai, said his customers liked California wines, but not enough to ignore an even higher price tag. The wine isn’t cheap as it is, he said, and if it gets pricier, he will look elsewhere.

I wonder if the Wine Berserkers membership buys more than $82M per year. Hell, Buzzini himself would be a significant chunk of that.

If Trump doesn´t cancel the import taxes for the EC completely, you should also be aware of 25% on Europaean wines …
(taxes on US-wines here won´t do any harm for me actually …)

I have high hopes for the 2020 vintage.

The Times article suggests that there are several submarkets in China. One is for the very wealthy who want trophy wines, typically European (e.g., DRC, Bordeaux first growths). But the much larger market is for the “aspirational” affluent consumer. There the competition for US producers is more likely to be Australian, New Zealand or Chilean.

Funny, John, I just read this article this morning…an interesting read. I liked that part about Europe having to teach Chinese winemakers as part of the deal, such shrewd bargaining!

Yes, technology transfer – the Chinese have insisted on that with manufacturers for several decades.

And that is a far bigger issue than the superficial tariffs. It’s not a democracy, it’s not part of the world economic system for the greater good of all. Every country looks out for itself, but giving up a little here and there made it possible to have safe shipping lanes, reciprocity on rules of trade, etc. And no country benefited more from that cooperation than China did. But if another country insisted on the technology and IP transfer that China did, it would have been sanctioned.

Now the ruler just got lifetime tenure and we play these little games as if they’re just like us, only a little bit different. They’re playing an entirely different game.

Wine is irrelevant except as an irritant.

Or a lubricant