China formally imposes tariffs on US wine imports

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On April 2, the official Weibo of the People's Daily quoted the official website of the Ministry of Finance as saying that with the approval of the State Council, starting from April 2, 2018, the Tariff Commission of the State Council decided to suspend tariff concessions on some imported goods originating in the United States. Obligations, including wine, impose a 15% tariff.

The Customs Tariff Commission of the State Council has officially issued the Notice on the Suspension of Tariff Concessional Obligations for Certain Imported Commodities Originating in the United States, the full text of which is as follows:

Tax Commission [2018] No. 13

General Administration of Customs:

In order to safeguard China's interests and balance the losses caused to China's interests by the imposition of tariffs (I. e. 232 measures) on imported steel and aluminum products by the United States, the Tariff Commission of the State Council decided to suspend the duty concession obligation on some imported goods originating in the United States. The relevant issues are hereby notified as follows:

The 1. suspends the obligation of tariff concessions on 120 imported goods, such as fruits and products originating in the United States, and imposes tariffs on the basis of the current applicable tariff rate, with an additional tariff rate of 15%

The 2. suspends tariff concession obligations on 8 imported goods such as pork and products originating in the United States, and imposes tariffs on the basis of the current applicable tariff rate, with an additional tariff rate of 25%

The current bonded and tax reduction and exemption policies of the 3. remain unchanged.

After the 4. tariff is imposed, the relevant calculation formula:

Tariff = customs value x (current applicable tariff rate plus tariff rate)

Import link consumption tax = import link consumption tax taxable value x import link consumption tax rate

Import link consumption tax taxable price (customs duty)/(1-import link consumption tax rate)

Import link value-added tax = import link value-added tax price x import link value-added tax rate.

Import link VAT taxable price = customs duty paid price customs duty import link consumption tax

5. This notice shall be implemented as of April 2, 2018.

Notice is hereby given.

Annex: List of Goods Suspended Tariff Reduction Obligations to the United States and Tariff Rates

Customs Tariff Commission of the State Council
April 1, 2018

Starting today, April 2, 2018, U.S. wines will be subject to an additional 15% tariff, totaling 29%. The combined tax rate was also raised from 48.2 per cent to 67.7 per cent. Comparison of data after an additional 15% tariff on American wines:

1. The increase in import costs before and after the proposed tariff increase of 15 per cent is roughly as follows:

Before the levy: comprehensive import tax rate = (tariff rate + value-added tax rate + consumption tax rate + tariff rate x value-added tax rate)/(1-consumption tax rate):(14% + 17% + 10% + 14% * 17%)/(1-10%)= 48.2;

After the proposed 15% tariff increase: import comprehensive tax rate = (tariff rate + value-added tax rate + consumption tax rate + tariff rate x value-added tax rate)/(1-consumption tax rate):(29% + 17% + 10% + 29% * 17%)/(1-10%)= 67.7;

Based on the value of a single batch of imported U.S. wine CIF (including freight and premium CIF) 100000 RMB:

1. Tariff comparison: 100000*14%= 14000 before the levy; After the levy, 100000*29%= 29000;

tariff increase 15000;

2. VAT comparison: 100000 *(1+14%)/(1-10%)* 17% = 21500 before the proposed increase;

After the proposed levy: 100000 *(1+29%)/(1-10%)* 17% = 24400

VAT Increase 2.44-2.15=2900

3. Comparison of consumption tax:

Before the proposed levy: (100000 *(1+14%)/(1-10%))* 10% = 12700

After the proposed levy: (100000 *(1+29%)/(1-10%))* 10% = 14300

Increase in consumption tax: 1.43-1.27=1600

In summary, the comprehensive tax burden on imports has increased 19500.

With the implementation of the tax increase on April 2, the export and sales of American wine to China will definitely be affected, especially the impact of low-priced wine. But because of the strong consumption of wine in the U.S. home market, the impact of China's tax increase on its wine industry remains to be seen.

Content from: wine online, micro-brewing Microvin