On Friday, China’s Ministry of Commerce said it will impose anti-dumping duties of up to 212.1% on Australian wine imports starting Saturday, prompting one of Australia’s largest wine exporters, Treasury Wine Estates (TWE), to suspend trading as its shares plummeted 13%.
“We don’t see it’s justified and we’re obviously deeply concerned about what it does,” Tony Battaglene, CEO of Australia’s wine association Australian Grape and Wine, told local media of the tariff move. The tariffs will range from 107.1% to 212.1% but the Ministry of Commerce also revealed specific tariffs for a number of exporters. Among those named, TWE was hit with the steepest tariffs, levied at 169.3%.
The levies come roughly three months after Beijing began investigating complaints made by the Wine Industry Association of China that Australian winemakers have flooded the market with cheap wine since 2015. Mainland China is an $850 million market for Australia’s wine exports and the leading consumer, consuming about 40% of Australia’s total overseas shipments.
The tariffs are the latest aggravation in rapidly deteriorating relations between Australia and its largest trading partner, China. Beijing already has imposed import restrictions on Australian barley, wheat, coal, beef, lobster, sugar, copper and timber. The wine tariffs will take effect tomorrow.
Relations between Canberra and Beijing have deteriorated sharply since 2017, when Australia’s domestic media broke reports of a coordinated Chinese campaign to buy influence in Australian politics. That scandal resulted in the resignation of an Australian senator, accused of accepting bribes in order to lobby for Chinese interests, and prompted the creation of Australia’s first rules against accepting political donations from overseas.
“It wasn’t foreign interference, it was China interference. It was very targeted at one country,” Linda Jakobson, director of Australian think tank China Matters, told Fortune of the legislation in September.
When the legislation passed, then-Prime Minister Malcom Turnbull chose to paraphrase Chairman Mao Zedong’s declaration at the founding of the People’s Republic of China in 1949 and said, in Chinese, that the Australian people had “stood up.”
Tensions flared again in 2018 when Canberra blocked China telecoms giant Huawei Technologies from bidding on contracts to develop Australia’s 5G infrastructure, calling it a national security threat. Other politicking picked further at the fraying ties until, in April this year, Australia’s push for an independent inquiry into the outbreak of COVID-19 in Wuhan, China, marked a breaking point.
“The Chinese public is frustrated, dismayed and disappointed with what Australia is doing now,” China’s ambassador to Australia warned at the time, in an interview with the Australian Financial Review. “If the mood is going from bad to worse…maybe the ordinary people will say ‘Why should we drink Australian wine? Eat Australian beef?”
China imposed 80% tariffs on Australian barley imports and banned beef imports from four major Aussie abattoirs a month later, when a watered-down version of the COVID-19 investigation Canberra pushed for was approved by the UN World Health Assembly.
Although Beijing initially downplayed the political motivations behind its moves, the government has since directly accused Canberra of “poisoning bilateral relations.” In a dossier distributed by the Chinese embassy in Canberra to several news organizations, China listed 14 grievances it had with its trading partner.
Among the complaints are Australia’s “incessant wanton interference” in issues related to Xinjiang, Hong Kong and Taiwan; Canberra’s funding of “anti-China” think tanks, such as the Australian Strategic Policy Institute (ASPI); the Australian media’s “unfriendly or antagonistic reporting” on China; and the decision to ban Huawei on “unfounded national security concerns.”
Beijing’s sentiment towards the feud was reportedly surmised by remarks the Sydney Morning Herald attributes to a Chinese official: “If you make China the enemy, China will be the enemy.”