Donald Trump’s tariffs threaten new blow just as SA wine recovers from Scott Morrison’s China row | David Penberthy

SA’s wine industry has only just recovered from the Morrison Govt’s trade war with China. Now it needs you, writes David Penberthy.

South Australia had a front-row seat for the economic devastation brought about by the Chinese tariff war in the wake of Covid.

Of any state in Australia, ours paid the highest price for the Morrison government’s legitimate call for a proper inquiry into the origins of Covid-19.

Whether Mr Morrison could have handled that call with more grace and less megaphone diplomacy is a separate argument.

All that mattered for SA was that our lobsters, barley, beef and most of our wine were all in the crosshairs, as China went to economic war after being embarrassed internationally.

It really is quite staggering that the local wine industry survived at all, given its huge reliance on China as an export market prior to the pandemic.

In October 2020, prior to the start of tariffs, China was SA’s largest wine export market, with exports valued at $946.5 million, accounting for almost 50 per cent of our wine exports globally.

When China confirmed it would be imposing a tariff of up to 218 per cent on Aussie wine, the impact was such that to the year ending January 2024, wine exports to China were valued at just $2.8 million.

From an ocean of wine to a tiny drop in the ocean. I can remember going on houseboat holidays in my early 20s when we almost drank that much wine.

Things have now turned around.

President Donald Trump speaks in the Roosevelt Room of the White House on, July 30. Picture: AP Photo/Mark Schiefelbein

The tariffs have been removed from all these industries, Albo has just spent a pleasant few days with his mate Xi Jinping visiting pandas and walking The Great Wall, and as of last month, one year after China lifted its tariffs, SA wine exports to China had rocketed back up to $855 million.

And bizarrely, the biggest trade threat to Australia now comes from the least likely of sources – our supposed best friend and key defence and trading partner, the United States of America.

And again, there is a risk that SA will be bearing the brunt of Donald Trump’s tariff madness, as he shows that friendships count for nought as he tries to make America both great again, and a lot more expensive.

We have already seen the unusual backflip by the federal government in relaxing quarantine restrictions on American beef. This looks more like an act of pre-emptive economic appeasement than a soberminded biosecurity measure.

Our local beef farmers are confused as to why the import barriers have suddenly been taken down, and are rightly asking the Commonwealth for more detail.

With Mr Trump floating a tariff on copper exports to the US, it is SA which potentially has the most to lose from any trade war in that sector, accounting as we do for some 70 per cent of Australia’s total copper exports through Olympic Dam and other mines in our state.

The one upside on that front is the copper export market to the US is small, counting for 1 per cent of our total copper exports.

Where things get really scary is for the wine industry, with many wineries having spent years pushing into the US market, aggressively sharpening their focus on American wine buyers as the Chinese market fell away.

Mollydooker Wines owner and winemaker Sarah Marquis. Picture: Supplied

One of the great success stories on that front is McLaren Vale’s own Mollydooker winery, makers of such great drops as Blue Eyed Boy and the mighty Velvet Glove shiraz, which exports almost 40 per cent of all its wine to the United States.

The winery’s foothold in the US is so significant that owner Sarah Marquis’ son Luke is based in Los Angeles working to advance US sales.

They have also employed four sales reps to help get their wines in front of American distributors and into bottle shops and food stores.

“We have a very large presence. We have been there for 20 years now all across the US,” Sarah told me yesterday.

“The (10 per cent) tariff that was put on us a few months ago, we have had to absorb that ourselves and not put up prices.

“But this impending tariff is a little bit scary as we will have to pass that one to all our wines entering the American market. We will have to raise our prices. It might cause Australian producers to go elsewhere and look for other markets.”

SA Trade Minister Joe Szakacs was commendably blunt talking about Trump’s ever-changing tariff plans, with the President saying the August 1 deadline will not be extended, at which point tariffs on all countries which haven’t cut deals, be they friend or foe, will increase from 10 per cent to 20 per cent.

“Tariffs are really destructive economic policy,” Mr Szakacs said this week. “Workers and jobs are at stake.”

The situation Mollydooker finds itself in is the human face of the stupidity of protectionism.

The transformation of our state’s economy over the last 30 years is also testament to that same point.

SA has more job opportunities now than it ever did during the so-called golden era of Thomas Playford where we thought we could make fridges, heaters, shirts and cars forever more, staring down the inevitable march of globalisation.

As a result of our shift away from old manufacturing, there is now a vastly greater diversity of industries in our state, and the abolition of trade barriers means the prices of all those aforementioned products have come down.

The good news at least is that here in SA and Australia, Sarah says Mollydooker will not be raising its prices to offset any losses sustained in the US, and will instead focus its efforts on finding other export markets or boosting exports to existing ones.

You know what to do, South Australia.

It is our patriotic duty to buy a carton of red from Mollydooker and raise a glass in the name of free trade – and in name of remembering who your friends are.

Originally published as Donald Trump’s tariffs threaten new blow just as SA wine recovers from Scott Morrison’s China row | David Penberthy