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Whisky sour? China importers caught in uncertainty as trade dispute with US deepens

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Beijing has fired back with a planned 25 per cent tariff on US whisky. The hikes could hit a growing industry of smaller craft US whiskies.

Shanghai

WHEN spirits dealer Daniel Taytslin brought his first pallet of American Ragtime Rye whisky into Shanghai in early April, the 672 bottles faced a 5 per cent import tariff at China's customs.

His next shipment from New York could be a lot more expensive as China prepares to slap a 25 per cent additional tariff on hundreds of American products, including whisky, because of a deepening trade dispute with the United States.

Mr Taytslin and other US whisky importers said that the worsening row is making small traders, as well as big business, very anxious. Some are accelerating shipments through customs to avoid potential tariff hikes. Others report unusual delays at customs that they worry are linked to trade tensions.

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The uncertainty gripping the niche market - US whisky imports to China were worth only US$8.9 million last year - reflects the wider concern in the US business community in China that the trade stand-off could spark major disruption for American products in the world's second largest economy.

China's overall market was worth US$611.5 million in 2016, according to the latest data from wine and spirits analytics firm IWSR, with Scottish whisky imports taking up virtually all of that. US whisky imports are in second place but growing rapidly.

Beijing last week said that it would not back out of a fight with Washington, dashing hopes for an easing of tensions after Chinese President Xi Jinping vowed to open China's economy further and lower import duties on some goods.

The US is planning 25 per cent tariffs on some 1,300 Chinese industrial, technology, transport and medical products. Chinese metal parts manufacturers have warned of factory closures or extra costs passed to US customers.

Beijing has fired back with a planned 25 per cent tariff on whisky and around 100 other US products, but has not yet said when it will take effect. It has already raised tariffs on some other US products, including fruits and wine, in response to Washington's imposition of duties on imports of aluminium and steel.

Mr Taytslin is already looking to take some of his goods out of a bonded warehouse in Shanghai, paying import taxes on them ahead of schedule to avoid being hit by increased tariffs. He is also debating whether to pass on the higher prices for his future US whisky shipments to customers.

"We now have a potential tariff increase, and I either have to eat into my margin to keep pricing consistent so it's competitive, or we're going to . . . have to release a higher price," he said.

The hikes could hit a growing industry of smaller craft US whiskies, as well as bigger names such as Brown-Forman Corp, the Louisville, Kentucky-based maker of Jack Daniels and Woodford Reserve. REUTERS