Bombshell blow for key Australian industry still reeling from China ban as Trump eyes fresh tariff move

Australian winemakers are now facing a new threat of American tariffs less than a year after recovering from China’s brutal trade sanctions.

Donald Trump is planning to inflict a new set of reciprocal tariffs on Australian agricultural exports from April 1.

United States wine exporters are complaining about Australian wine taxes, which they regard as an impediment to doing business, leading many to consider the Australian wine industry would be in Trump’s sights.

The Trump Administration is set to raise these issues after it rejected Australia’s bid for an exemption to new 25 per cent steel and aluminium tariffs.

The California Association of Winegrape Growers specifically raised objections about Australia’s 29 per cent wine equalisation tax for businesses that make, import or sell wines.

‘US wine exporters … must pay the full 29 per cent tax without access to any offsets, making it more difficult to compete in the Australian market,’ it said in a submission seen by The Australian.

‘This structural imbalance, combined with additional import duties and taxes, creates a significant trade barrier that unfairly disadvantages US wine producers. 

‘Australia’s wine industry benefits from government programs that distort competition.’

Natalie Collins, the lobby group’s president, said non-tariffs barriers in a range of countries had disadvantaged Californian grape growers.

‘If we want to protect California winegrowing, we need policies that stop unfair trade practices and a commitment to buying and promoting California wine,’ she said. 

‘This moment presents a valuable opportunity to address the need for a level playing field for California winegrape growers.’

Australia’s new fight with the Trump Administration is occurring less than a year after China finally removed its 218 per cent tariffs on Australian wine, which had been originally imposed in 2020 after former prime minister Scott Morrison called for an inquiry into the origins of Covid.

A string of trade restrictions on Australian products were rolled out by China between May and November 2020 in the form of higher tariffs placed on wine and barley, biosecurity measures against some beef and timber, and unannounced bans – also called non-tariff barriers – on coal, cotton and lobsters.

The trade sanctions caused South Australian family business, Salena Estate Wines Pty Ltd, to be placed into administration last year, as winemakers faced with high costs scrambled to find new export markets.

The company was among Australia’s top 20 wine producers and exported to 10 countries, growing grapes on 191 hectares of land at Bookpurnong in South Australia’s Riverland region.

New US tariffs on Australian agricultural exports are set to come into effect on April 1, alongside new import taxes on Australian pharmaceutical exports unless an exemption is secured.

The Pharmaceutical Research and Manufacturers of America, which counts drug giants Pfizer as a member, has already written to US trade representative Jamieson Greer complaining about countries with pharmaceutical subsidies, including Australia.

The US imposed new 25 per cent tariffs on Australian steel and aluminium earlier this month.

Unlike 2018, the Trump Administration has overlooked how the US has had a trade surplus with Australia dating back to 1952, where Australia bought more goods and services from the United States than it bought from us. 

Australia last year exported $325million worth of wine to the United States, Wine Australia data showed.