Mohamed A. El-Erian , Columnist

There’s More Than Wine in Australia-China Trade Tension

The cost of playing both sides of an economic superpower battle is increasing.

November 29, 2020 at 10:00 PM UTC

Corrected

November 30, 2020 at 2:22 AM UTC

Mohamed A. El-Erian is a Bloomberg Opinion columnist. A former chief executive officer of Pimco, he is president of Queens’ College, Cambridge; chief economic adviser at Allianz SE; and chair of Gramercy Fund Management. He is author of “The Only Game in Town.”

It’s not just about the wine.
Photographer: STR/AFP/Getty Images

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Much of the world is inclined to regard the escalating trade tensions between Australia and China as a nasty bilateral disagreement that will find resolution. But I suspect these tensions could be part of a bigger phenomenon whose origin can be traced back to the challenged China-U.S. relationship, and their implications could extend to several other countries.

This Asia-Pacific tension point escalated significantly last week when China imposed tariffs of 107% to 212% on Australian wine coming into the country — a market that accounts for nearly 40% of Australia’s total wine exports and is most important now seasonally. This follows earlier actions against other Australian goods, including some agricultural products, seafood and timber.