Treasury Wine Estates share price collapses on 212% tariff hike

'The Australian Government categorically rejects any allegations that our wine producers are dumping product into China’ – Minister for Agriculture David Littleproud said.

Treasury Wine Estates share price falls on duties hike

The Chinese Ministry of Commerce on Friday announced it would slap tariffs of up to 212% on Australian wine imports.

The tariffs on Australian wine, described as ‘preliminary’, are set to come into effect on Saturday, November 28, and will range from 107.1% to 212%.

This announcement comes after China launched anti-dumping investigations into Australian wine imports earlier this year.

The South China Morning Post cited the commerce ministry as saying: ‘there is a causal relationship between dumping and material damage.’

Investors ripped into Treasury Wine Estates in response to this news, with the stock plunging 11.25%, to $9.23 per share. The stock was swiftly put in a trading halt, pending the release of an announcement.

The company noted that 'TWE is reviewing the details of the provisional measures as a matter of urgency in order to update the market.'

In response to this news, Australia’s Minister for Agriculture expressed his extreme disappointment at the planned tariffs, saying:

'The fact is Australia produces amongst the least subsidised product in the world and provides the second lowest level of farm subsidies in the OECD.'

'The Australian Government categorically rejects any allegations that our wine producers are dumping product into China, and we continue to believe there is no basis or any evidence of these claims.'

Looking forward, Mr Littleproud said:

'We will continue to work with our wine industry and Chinese authorities as part of the ongoing dumping investigation, but we will of course consider all of our options moving forward.'

Were these worries really priced in?

Today’s announcement by the Chinese Ministry of Commerce caps off a difficult period for Treasury Wine Estates (TWE).

In early November, the company reported a set of quarterly results which pointed to recovering demand in key markets, but also highlighted double digit declines across EBITS and NPAT. The market looked through that though, bidding the stock higher in response.

That was off a low base though. With the stock down 42% YTD, many were hoping that the headwinds facing the company were already priced in.

Indeed, when UBS, on November 5, raised their rating from Neutral to Buy, Treasury traded at just $7.96 per share, it was argued that the tariff risks were already priced in.

At the time, the investment bank went on to say that ‘we appreciate there are a wide range of outcomes, with near-term catalysts limited as high tariffs look increasingly likely (e.g. Barley ~80.5%, US 93%).’

Such comparisons look conservative relative to today’s news.

Want to take a position in ASX-listed stocks – long or short?

Create an IG trading account or log in to your existing account to get started now.

The information on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG Bank S.A. accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer.

Act on share opportunities today

Go long or short on thousands of international stocks with CFDs.

  • Get full exposure for a comparatively small deposit
  • Trade on spreads from just 0.1%
  • Get greater order book visibility with direct market access

See opportunity on a stock?

Try a risk-free trade in your demo account, and see whether you’re on to something.

  • Log in to your demo
  • Take your position
  • See whether your hunch pays off

See opportunity on a stock?

Don’t miss your chance – upgrade to a live account to take advantage.

  • Trade a huge range of popular stocks
  • Analyse and deal seamlessly on fast, intuitive charts
  • See and react to breaking news in-platform

See opportunity on a stock?

Don’t miss your chance. Log in to take your position.

Live prices on most popular markets

  • Forex
  • Shares
  • Indices

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.

You might be interested in…

Find out what charges your trades could incur with our transparent fee structure.

Discover why so many clients choose us, and what makes us a world-leading provider of CFDs.

Stay on top of upcoming market-moving events with our customisable economic calendar.