As the U.S. and China ratchet up a tit-for-tat tariff dispute, it has been said often in the last few weeks: "No one wins a trade war."Nevertheless, staying out of a war is often the best way to win, or at least not to lose.Take Australia, for example. In the 1990s, as the Asian economic miracle was taking shape, Australian politicians worked hard to overcome the country's geographic and cultural distance from that region to position it on the economic front lines. And while the U.S. has pulled out of the Trans-Pacific Partnership trade deal, Australia is still part of the pact. Canberra has also forged a series of bilateral deals with its regional neighbors, including a China-Australia Free Trade Agreement.China is now Australia's largest trading partner. What's more, it produces many of the things that China also sources from the U.S. – exports that appear on Beijing's list of 128 U.S. goods that will see tariffs of 15 to 25 percent in retaliation for the Trump administration's decision to impose similar tariffs on aluminum and steel from China.To be sure, there is plenty of hand wringing in Sydney, Perth and Canberra over the looming cross-Pacific trade war. See here and here.Even so, individual sectors in Australia stand to gain, by increasing production and/or prices of some basic commodities to feed China's enormous appetite.WineA record-breaking 2017 for Australian wine exports saw an overall increase of 15 percent from the previous year to $2.56 billion. Exports to mainland China – Australia's single-largest wine export region — were up a whopping 63 percent, with a total value of $848 million, nearly twice as large as the U.S., which lands in the No. 2 spot.The Wine Spectator reports that while the U.S. exported around $80 million worth of wine to China last year, that was dwarfed by France, Australia and Chile, the latter two having free-trade agreements with Beijing "which put them at a significant advantage.""Current Chinese customs duties for U.S. wines are 14 percent—the new tariffs increase that to 29 percent. Wines from Australia and Chile are charged customs duties of 0 percent. According to [the Wine Institute's Asia Director Christopher] Beros, these countries "have relied heavily on exports for many years for their entire industries [and] have been aggressively marketing in China," the Wine Spectator writes."If U.S. wines are subjected to higher tariffs when imported into China, that would have a direct benefit to other suppliers into that rapidly growing market, especially France and Australia — the two largest suppliers of premium wines to China," Kym Anderson, a professor of economics at the University of Adelaide in Australia and also executive director of the university's Wine Economics Research Center tells CNBC.Robert Koch, the CEO of the Wine Institute, is more direct: "This new increased tariff will have a chilling effect on U.S. wine exports to one of the world's most important markets," Koch tells CNBC. "U.S. producers were already at a disadvantage to many foreign competitors, and this will only exacerbate that problem. We urge a swift resolution to this crisis before long-term damage is done to the U.S. wine industry."Fruits and NutsJoel Nelsen, the president of the trade group California Citrus Mutual is quoted by member station KVPR as saying "The market share that we've been trying to develop over the past several years becomes expendable and there's an opportunity for others to steal it."One of the thieves, so to speak, might be – you guessed it – Australia, which is the biggest competitor to the U.S. fruit exports to China. The Australian Bureau of Statistics says 40 percent of the country's fruit already gets shipped off to China and Hong Kong.Meanwhile, as the Australian Broadcasting Corporation (ABC) reported last year:
Who Wins A U.S.-China Trade War? Maybe Australia
