Australia is hinting it will retaliate in kind against China, which on Saturday began collecting hefty tariffs as high as 212% on Australian wine exports.
China said it imposed the massive tariffs on Australian wine to punish Australia for dumping cheap Australian wines into China to undercut their Chinese competitors. It alleges suffering "substantive harm" from the cheaply priced Australian wines now flooding Chinese markets.
China's Ministry of Commerce said the new and large "anti-dumping security deposits" will range from 107.1% to 212.1%. These new taxes, which either doubles or triples the cost of Australian wine, will start being collected on November 28. The ministry claims the new tariffs are "temporary" but gave no date as to when these will end.
China's move was quickly seen by Australian political leaders as revenge for Australia's standing-up to Chinese abuses and for establishing closer military ties with liberal democracies such as Japan and Indonesia out the negate Chinese expansionism.
David Littleproud, the Minister for Agriculture, Drought and Emergency Management, suggests the new tariffs move are politically motivated and vowed to appeal the ruling to the World Trade Organization (WTO).
He also said Australia would "vigorously defend" its wronged wine industry from the new Chinese tariffs.
"The Australian government will vigorously defend the industry," said Littleproud.
"The Australian government categorically rejects any allegation that our wine producers are dumping product into China, and we continue to believe there is no basis or any evidence for these claims," he said.
Under WTO rules, member-states such as Australia can ask for tariffs or other trade barriers to be examined. If China's wine tariffs are found to be unfair, Australia could win the right to impose countervailing duties of similar value on Chinese goods.
"We have 10 days in which to appeal, and we'll work closely with the industry around that," said Littleproud.
"We're deeply concerned by this. In light of the recent comments by China, it gives the perception this decision is predicated on something other than any wrongdoing by the wine industry."
The trade row will immensely harm Australia's wine industry. China accounts for 40% of Australian wine exports and is the industry's largest customer.
According to Wine Australia, Chinese demand for Australian wine has skyrocketed and has doubled to 52 million bottles in only seven years.
The punitive wine tariffs come in the wake of massive Chinese tariffs on Australian beef and barley. China has also unofficially banned Aussie exports of coal, sugar, lobsters, copper, and logs.