More Expensive US Wines to Chinese Consumers

The US-Sino trade war sparkled and caused the U.S. wine imposed an extra 15% custom duty (on top of the original 14% for bottled wine & 20% for 2-liter up packaged wine and bulk wine), which made the aggregate tax rate to 67.7% (from 48.2%) and 75.5% (from 56%) respectively, inclusive of the 10% consumption tax and 17% value-added tax. The new tariff was effective April 2, 2018. This made the U.S. wine has an average 13% increase on cost to the Chinese importers and distributors.

This gave an impact to the market position to the U.S. wines considering its import volume actually declined in 2017 while the data interpreted the importers successfully escalated and switched to upper class wines and not to fight against in the entry-level wines with their European counterparts.

Since the U.S. wine had only a small market share of 1.74% and 2.96% respectively (in terms of volume and value in 2017). It’s hard to tell what the consequence and market impact would be. However, it’s inevitable that some of the Chinese consumers would be driven to choose more valued wines from the Old World and South American producers (e.g. Chilean and Argentine wines).

#USwines #customduty #aggregatetax #USSinotradewar

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