Australia’s Treasury Wine Estates expressed confidence on Monday that it can revamp its business in China, causing its shares to rise by over 5%. This optimism stems from the recent signals by both countries to potentially remove Beijing’s tariffs on Australian wine.
The Australian government, working to mend economic relations with China after several disputes, revealed on Sunday that China had agreed to expedite a review of tariffs on Australian wine, a process expected to take up to five months.
For Australian businesses, especially those heavily reliant on the Chinese market, the ongoing geopolitical tensions and trade disputes have been a real challenge. Tariffs on Australian wine exports to China have been particularly impactful.
Australian winemakers and growers are cautiously hopeful that these tariffs will soon be lifted. China’s announcement on Sunday about the five-month tariff review process was met with Australia’s agreement to suspend actions against China in the World Trade Organization.
These tariffs, initially imposed in November 2020, reached as high as 200%, significantly affecting more than $1 billion worth of annual wine exports to China at that time.
South Australia, known for its robust wine production, was hit hard. Kirsty Balnaves, the president of the Wine Industry Association in the region, sees this news as a promising first step. The industry, once exporting $1.3 billion of wine to China, has dwindled to just over $10 million due to the tariffs.
The journey hasn’t been easy for grape growers in Riverland, who have faced record-low fruit prices as the tariffs contributed to an oversupply of red wine in storage. Meanwhile, in New South Wales, the president of the Riverina Winemakers Association, Andrew Calabria, remains cautiously optimistic about re-entering the Chinese market, considering the evolving economic situation in China during the COVID period.
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