Trade tariffs: Australian exports hurt dearly by Chinese tariffs

The cost of Chinese tariffs — such as those enforced on red wine and beef — on Australian farmers has been revealed. See the breakdown.

Australian producers lost out on more than $6 billion in export revenue between last July and February this year due to import restrictions imposed by China, according to a recent report that quantifies the economic effect of the trade tensions.

Beef, cotton, rock lobster and wine were among the most severely affected, according to the paper published by University of Adelaide researchers.

Australia’s wine industry changed virtually overnight in early 2020, when strict tariffs of more than 200 per cent were slapped on bottled wine exports into China.

The rock lobster industry was hit especially hard by the tariffs. Picture: AAP Image/Joel Carrett

“No-one saw it coming,” Duxton Vineyards general manager Wayne Ellis said.

Wine was just one of a number of Australian agricultural commodities hit by trade embargoes, dumping investigations, and crippling tariffs in the past 12 months, including coal, copper ores and concentrates, frozen beef, cotton, barley, rough wood, and rock lobster.

And it’s been a hard slog ever since for producers who relied on the Chinese market to pay the bills, Mr Ellis said.

“It’s bloody hard. It’s hard enough doing what we do. We battle the weather, and it’s hard enough,” Mr Ellis said.

“This now has made a market that we could pay our bills with, and made it pretty difficult. And it happened in a very short period of time.”

Source: Included

More than 12 months since the strict tariffs, and Mr Ellis said the landscape of the global wine economy has changed.

Mr Ellis said the Chinese market for Australian wine – predominantly red wine – was about 12 per cent of Australian exports, and about two per cent of Duxton’s volume.

“In essence it isn’t huge … we sold to an Australian-based Chinese business. But the true impact is that volume has to be repositioned somewhere on the globe,” Mr Ellis said.

“From a varietal point of view, this time last year before the tariffs, Shiraz from the Murray Darling was about $1.30 a litre. I haven’t been able to find a market for this, and it’s down to about 65 cents a litre,” Mr Ellis said.

“Most producers I speak to are going to stretch out the 2021 vintage as long as they can, and go shorter on vintage 2022, and see what the horizon looks like,” Mr Ellis said.

“If you’re going to have the same volume in vintage 2022, which is only two months away, and you haven’t sold last year’s or don’t have a market … I don’t think too many producers in Australia will make too much money from unallocated 2021 vintage wines.”

A working paper published by University of Adelaide academics estimated the direct loss due to a change in market share for Australian frozen beef was about US$248m from December 2020 to February this year.

Wine suffered a US$127m market share loss, while cotton lost US$180m worth of market share.

Originally published as Trade tariffs: Australian exports hurt dearly by Chinese tariffs