China Tariffs Threaten California's Robust Wine Industry
GEYSERVILLE (KPIX 5) – You might think the fight over trade between the U.S. and China is just about aluminum and steel but it could have a big impact in the San Francisco Bay Area, especially in wine country.
David Amadia is the president of Ridge Vineyards in the Santa Cruz Mountains.
"We go once, sometimes twice a year to China and we go to Shanghai, Shenzen, Beijing," Amadia said.
His is a small to medium size vineyard in Montebello.
For years, his company has been exporting wine to China. And three years ago, it got a big boost.
When President Obama was in office, he had a dinner for Jin Ping, the President of China. The site for that dinner was Geyserville, California.
There was a huge interest in China for Geyserville and there still is today.
It's all part of an explosion in U.S. wine exports to China.
According to The Wine Institute, an advocacy group for the California wine industry, in the last ten years the amount of U.S. wine sold to China has quadrupled.
In 2017, U.S. wine exports to China, Taiwan and Hong Kong were worth $210 million, or ten percent more than the year before.
"Really over the last 5 to 7 years we've seen really nice, steady growth of our wines in China," said Amadia.
But in response to President Donald Trump's new tariffs on Chinese steel and aluminum, China is now threatening to increase tariff's on certain U.S. imports, including a 15 percent tax on wine.
That's on top of the 40-45 percent markup that consumers already pay.
"Basically, our wines are twice as expensive in China as they are here. If a bottle sells here for $35, it's $70 on a shelf in China," said Amadia.
He says a higher tax just on U.S. wine puts American wineries at a disadvantage.
"We are already in sort of fierce hand to hand combat with France and Australia and Chile, now we're just ceding them a lot of advantage with our wines being that much more expensive than theirs," Amadia said.
Of all the U.S. imports that China could tax, why wine?
Amadia says wine is a visible U.S. product. It's on menus and in grocery stores.
"It certainly wasn't for the overall economic impact, so I think it had more to do with PR value," Amadia said.
He's hopeful that the new tax won't take effect.
"I'm optimistic that maybe this was just an opening gambit, a negotiating ploy, and that cooler heads will prevail and we can get this resolved in the next month or so," Amadia said.
