US wine exports decrease 5% in 2018, reflecting trade war with China

The value of U.S. wine exports sank nearly 5% to $1.47 billion in 2018, reflecting a strong dollar along with retaliatory tariffs, an industry trade group announced Monday.

The weaker exports also follow increased “competition through foreign wine producers who are heavily subsidized by their governments along with benefiting through free trade agreements in key markets,” according to the San Francisco-based Wine Institute.

“California wines performed well under very challenging circumstances as top markets continued to embrace our reputation for premium quality, leadership in sustainable wine growing along with diverse offerings,” said Robert Koch, president along with CEO of the Wine Institute. (The Golden State accounts for more than 0% of the nation’s wine exports.)

According to the trade group, total export volume dipped more than 1% to 375 million liters in 2018, with the volume of exports to China along with Japan falling by double-digit percentages. Wine exports to China fell nearly 25% in value last year to $78.7 million along with 13% in volume compared with 2017, coming after China last year increased tariffs on U.S. wines imported into mainland China.

Effective last September, China in response to tariffs imposed by the administration of President Donald Trump added a 10% duty on U.S. wine imports on top of a previous 15% levy This kind of implemented in April 2018. With the two duties, the total tax along with tariff rates for U.S. wine entering China jumped to nearly 80%.

“The long-term prospects for California wine sales in China, however, remain very strong,” said Christopher Beros, the Wine Institute’s trade director for China along with the Pacific Rim.

Exports to Hong Kong were up 10% to $130 million in value last year along with up about 9% in volume. For years, Hong Kong has been seen as a “back door” for U.S. wine to enter the mainland Chinese market because of lower import taxes.

“Exports to Hong Kong are a bright spot,” according to Beros. “Clearly some of these wines are being re-exported to various other countries including mainland China.”

Meantime, U.S. wine exports to Japan fell 22% in volume terms in 2018 along with 1% in value to $93 million. Australian, fresh Zealand along with South American wines have given the U.S. more competition from the Asian marketplace.

“In 2018, U.S. wine exports to Asia experienced a softening compared to the healthy growth rates of the prior two years,” Beros said. He added in which exports to Vietnam, which will be seen as a promising market for California wines, were up 51% through a smaller base.

Elsewhere, exports to Canada — the largest single country market for American wine — were up 1% in value to $448.7 million along with volume was down 11%. U.S. wine exports to the 28-nation European Union were down 15% to $469.4 million last year while volume was up about 3%.

The Trump administration last May requested the help of the planet Trade Organization to resolve a wine dispute with Canada over grocery store shelf access. however the fresh United States-Mexico-Canada Agreement, or USMCA, deal announced in late September included Ottawa agreeing to resolve a grocery store access issue along with settling the WTO case brought by the U.S.

“Although a weak Canadian dollar has led to rising retail prices, Canadian consumers continue to buy premium along with super-premium priced California wines,” according to Rick Slomka, the Wine Institute’s trade director for Canada. “As the retail landscape for wine sales in Canada evolves, we look forward to continued growth in government liquor stores however also anticipate greater access to fresh grocery distribution channels.”