China will impose up to 200% in tariffs on wine imports from Australia starting Saturday.
The decision is a blow to Australia's $1.2 billion wine industry and further escalates tensions between the two nations.
The new duties, which will be charged as "anti-dumping security deposits," follow China's Commerce Ministry telling importers to suspend all orders of Australia wine.
Trade authorities said they have "good reasons" to impose the duties as a result of a continuing antidumping investigation into Australia wine imports. Preliminary findings determined that wine from Australia is causing local winemakers "substantial harm," authorities said.
The investigation, which is expected to be concluded next year, accused Australia producers of selling their wines below the cost of production.
Starting Nov. 28, all Australia wine entering the China market will be subject to antidumping deposits. The Commerce Ministry said that the deposits would range between 107% and 200% - depending on several factors.
The share prices of wine-related companies in Australia fell in response Friday. For example, Treasury Wine Estates Ltd., one of Australia's largest wine exporters, saw its share price fall 11.24% Friday to AUD9.23 ($6.81). Trading was halted with the company confirming its paper will resume Tuesday.
Wine manufacturers in Australia objected to the decision - with most calling on the government to remedy the problem to save the industry. Australian Trade Minister Simon Birmingham said the new tariffs would be "devastating" and action needed to be taken against the "unjustified" move.
"The China market is a big market for us, but also some of our major competitors, particularly from Europe, are [now] given a tariff advantage of 100%-200% [which] is going to make it very difficult to compete...it won't be good," one importer said.
Wine importer Australian Grape and Wine Inc. said it had received reports of many containers of wine building up at China ports. The company added products hadn't made it through China customs and Australia is now halting all shipments.
