China's five-year wine tariffs hit Hunter Valley vineyards

The Chinese communist dictatorship has imposed tariffs of 116 to 218 per cent on Australian wines. The sanctions, which China's Ministry of Commerce introduced from Sunday, will be in place for five years.

Brian McGuigan, a retired Hunter Valley wine luminary, said Australia should hit back against China.

"I think we should never buy another Chinese-produced chemical. We should take all the Chinese vehicles and shove them in the harbour," Mr McGuigan said.

"We should be very upset and do our bit to ensure we respond by not buying Chinese-produced products.

"That's not just a spiteful thing to do, but I think it's balancing up the ledger properly for something that is really politically based."

Tyrrell's Wines managing director Bruce Tyrrell said China was "being the schoolyard bully because Australia won't do what they want or tell us to do".

Before China's export ban, Tyrell's was selling wine to China worth $750,000 to $1 million a year. These sales followed the Australian wine sector securing a free trade agreement with China in 2015.

Hunter wineries exported 135,000 litres of wine to China in the 12 months to April last year. China had been the Hunter Valley's major export market, worth $1.8 million a year. This represented 46 per cent of Hunter Valley wine exports.

Hunter Valley Wine and Tourism Association chief executive Amy Cooper said China had been the region's biggest wine export market in the Hunter and across Australia.

"From our perspective, it's a very disappointing outcome. Particularly because a number of our wine producers have invested a lot in developing their China markets," Ms Cooper said.

"Now they need to look for other opportunities either domestic or exporting to other countries. That will be a significant investment for them."

Mr Tyrrell said exports to China began "because sales of domestic wine in China were falling quite rapidly".

"China is one of the world's larger wine-making nations."

The tariffs would "get rid of the major competition, which was us". However, he said European winemakers could benefit.

China's commerce ministry said the tariffs were an "anti-dumping measure".

Prime Minister Scott Morrison "completely" rejected this claim.

Mr Morrison said the Chinese had admitted publicly that this was "some form of retaliation for Australians standing up for our values".

"That is not OK."

Federal minister for Trade, Tourism and Investment Dan Tehan said the tariffs meant it would be "basically impossible" for Australian wine to compete in the Chinese market.

Mr Tehan said the tariffs were "extremely disappointing and completely unjustifiable".

The decision comes after China said last year it would impose temporary tariffs on Australian wine from November for four months, but warned it could extend them.

China's grievance followed Mr Morrison calling for an independent inquiry into the origins of COVID-19 in May last year.

The Chinese government has since placed export restrictions or tariffs on a range of Australian products including barley, beef, coal, lobster and timber.

The federal government is considering challenging China's wine tariffs at the World Trade Organisation, as it has done with barley.

Mr Tyrrell said China's accusation of Australian companies "dumping" wines in the Chinese market was "a beat-up".

"We had a free trade agreement. Once that was negotiated, our prices were a bit cheaper. That increased our market share."

He said the average price of Australian wine going into China had gone up by 30 per cent in recent years, so the claims of dumping were "not fair dinkum".

"I think well-educated, well-travelled, middle-class Chinese people are getting sick of the Chinese communist dictatorship.

"They really like Australian wine. I think they'd like more freedom in their life, as they've seen in Western countries. I don't think they're terribly happy about being continuously told what to do."

Tyrell's started looking for other markets in July last year, following China's resentment over Australia's calls for a COVID-19 inquiry.

The company is now looking to markets in Russia, Spain, Uzbekistan and Kazakhstan.

"We'll never replace China simply because of the size of the market and its lack of structure," Mr Tyrrell said.

"We had the ability to gain much higher prices in China than traditional markets in the US and UK. In America, you have to sell to an importer, who sells to a state wholesaler, who sells to a retailer who sells to the public. There are four lots of margin there.

"In China, you're selling direct to the final customer. Our record highest prices for products are all in the Chinese market."

If China carried through with the five-year tariffs, the effects would last much longer.

"It'll be 10 years to get back to where we are. We'd have to get our places back on the wine list and start promoting again," Mr Tyrrell said.

"The majority of us are now saying China is over, forget about it. Let's get on with growing markets in other countries."

Tony Battaglene, chief executive of Australian Grape & Wine, said finding new markets would take "collaboration, hard work and commitment".