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As tariff debate continues, one industry weighs in

Wine industry concerned about 15-percent tariff

As tariff debate continues one industry weighs in

MONTEREY COUNTY, Calif. - President Donald Trump has ordered the U.S. Trade Representative to consider an additional $100 billion dollars in trade tariffs against China.  It's the latest escalation in what could soon be an all-out trade war between the world's two biggest economic powers. 

China has already threatened $50 billion of tariffs on U.S. exports such as soybeans, pork and aircraft. That came in response to President Trump’s proposed $50 billion in tariffs on Chinese goods earlier this week. 

White House Economic Advisor Larry Kudlow said there’s still time for the two countries to negotiate a deal. 

"Hopefully this will have a very happy ending,” Kudlow said. “I'm still optimistic, by the way, that the Chinese recognize that the rest of the world is on our side."

In the meantime, President Trump has ordered his agricultural secretary to find a way to protect American farmers who may be impacted by the Chinese tariffs. 

California is home to some of the products on the tariff list, including fruits, almonds and wine. Local agriculture experts on the Central Coast are monitoring the situation, watching and waiting to see what the next move will be.

The latest numbers from the Monterey County Crop Report show the total economic impact from the 2016 wine grape crop was over $750 million. It’s hard to say how much of our local wines have gone to China, but the newly proposed tariffs will not help the U.S. in one of the fastest growing wine markets.

This week, China proposed increasing the tax on many U.S. imports, including wine. According to the Wine Institute, the taxes and tariffs on U.S. wine is now nearly 70-percent, putting the U.S. at a competitive disadvantage to other countries. 

“The taxes and tariffs in China before were about 48-percent,” said Kim Stemler, executive director of the Monterey County Vintners and Growers Association. “Since April 2, they have raised it by 15-percent so now taxes and tariffs are around 70-percent, approximately 70-percent on a bottle of wine or a case of wine. That is not so with other countries’ wines. For example, New Zealand or Argentina, in China the taxes and tariffs are only about 27-percent and starting in a few months, there's not going to be any tariffs on Australian wine in China.”

China is an emerging wine market. The Wine Institute reports the value of U.S./California wine exports to China have increased 450-percent in the past decade. 

"In the past there was a palate preference for sweeter wines, but that is shifting in China right now,” Stemler said. “They're enjoying cabs and pinots and chardonnays much more than they used to."

Other local ag experts tell us they’re watching the situation daily and are not yet sure how our local crops are going to be affected. 

According to the 2016 Monterey County Crop Report, Monterey County exported more than 13.3 million lbs of goods to the country, though right now it’s unclear what crops those are, and if they will be affected by the tariffs.

According to CBS News, in the short term, the dueling tariffs wouldn’t cause major economic harm, however a full blown trade war could slow down the economy in both countries. Some speculate consumers could see higher prices down the toad. 
The $50 billion in tariffs the U.S. has announced won’t take effect until mid-May. A public comment period on the tariffs will last until May 11 and a hearing for them is set for May 15. China said it won’t implement any tariffs unless the U.S. does first. 

CBS News contributed to this report.

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