The China Trade Dispute of 2020

How China imposed tariffs and informal bans on Australian wine, barley, coal and lobster after diplomatic tensions in 2020, how Australia diversified, and how restrictions were lifted.

In 2020, relations between Australia and China soured.

Trigger

Australia called for an independent inquiry into COVID-19’s origins and had earlier banned Huawei from 5G networks.

China’s response

China imposed tariffs and informal restrictions on:

Barley (tariffs of around 80 percent).
Wine (tariffs over 200 percent).
Coal, beef, lobster and timber.

Effects

Wine and barley exporters lost their largest market.
But iron ore, which China needed, was untouched.

Diversification

Exporters found new markets: barley to Saudi Arabia and Japan, coal to India.
Australian coal exports to India rose.

Resolution

After a change of government in Australia in 2022, relations improved, and China lifted most restrictions by 2024.

Lesson

Economic coercion can hurt specific sectors, but diversification reduces vulnerability.

The wine glut

An Australian winery that sold mostly to China lost its buyers overnight in 2020, forcing it to find new markets in Asia and Europe.

Thinking trade disputes hit all exports equally

China spared iron ore, which it needed.

Key takeaways

China restricted Australian barley, wine, coal and more in 2020.
Iron ore was untouched.
Exporters diversified to other markets, including India.
Most restrictions were lifted by 2024.