Australia stands to be caught in the middle of a trade war between the United States and China, as the world’s two largest economies launch increasingly retaliatory tariffs at each other.
While some local industries may become more exposed to risk as a result, business information analysts IBISWorld believe Australia will also have the rare opportunity to seize export market share in both markets.
As China and the United States increasingly lock each other out of their domestic markets, certain Australian agricultural industries have the opportunity to seize market share.
In 2017-18, China is expected to account for 25.1 percent of export demand in the Australian Wine Production industry, and this is forecast to grow in response to a 15 percent tariff imposed on US wines this month.
As far as I’m concerned the higher they hit the US with the tax... the betterGraeme Shaw
Vineyard owner Graeme Shaw expects to benefit from this. Increased tariffs on US imports to China stand to automatically give his business a 15 percent pricing advantage.
His Murrumbateman business Shaw Vineyard Estate produced approximately 20 containers of wine each year, or 280,000 bottles.
Most years, about 20 percent of this is exported to China.
“As far as I’m concerned the higher they hit the US with the tax... the better,” Mr Shaw said.
“With our reduction in trade tariffs on top of that, by next year it’ll make a 20 percent difference, so that’s good for us.”
It’s caught in the middle, but Australian industries are well positioned to work the trade-war to its advantage, says Jason Aravanis, Senior Analyst at IBISWorld.
“Australia is one of the best-placed countries in the world to reap the gains of a trade war, due to our natural advantage of having ease of access to maritime trading with both major economies,” said Mr Aravanis.
“In addition, Australia has beneficial bilateral free trade agreements with both China and the US, which provide more stability to international trade.”
“While the trade war presents opportunities for some sectors, others will likely be at greater risk, as Australia is being caught between its largest trade partner and its largest investor; between the economy we rely on and the nation we look to for our security.”
Pork, grain and fruit industries also stand to potentially benefit from the international situation.