The relationship deteriorated after Canberra called for an international inquiry into the origins of the Covid-19 pandemic earlier this year.
China is Australia’s largest trading partner, but Canberra felt compelled to challenge the Chinese government and the relationship has since unravelled.
Australia still managed to increase wine exports to Mainland China by 4% to $1.2 billion in the year to September 30. That cemented its status as the leading export market for Australian wine, ahead of the UK and the US, but that status is now imperilled.
China officially said the decision to impose a 212% tariff on Australian wine was designed to stop domestic production from being damaged by cheap imports.
However, the Australian government denied subsidising exports and called the move “outrageous”.
China had already halted or imposed curbs on Australian beef, barley, seafood, sugar and timber. Over the weekend it also posted a fake image of an Australian soldier holding a knife to the throat of an Afghan child on its official Twitter account.
Australian prime minister Scott Morrison called the move “totally repugnant” and demanded it be taken down.
Beijing is said to be frustrated about its inability to influence the Australian political system, and it is upset by the decision to exclude Huawei from taking part in the rollout of next-gen phone networks Down Under.
Australia has also joined Japan and ASEAN in expressing concern about Chinese activit in the South China Sea.
The Chinese foreign ministry has called upon Australia to take action to improve relations.
Trade minister Simon Birmingham said the tariff will make it impossible for Australian wine producers to compete in China.
“This is a very distressing time for many hundreds of Australian wine producers, who have built in good faith a sound market in China,” he said.
“Australia defends to the hilt our winemakers, their integrity, and the commercial market-based proposition and environment in which they operate.
“The idea that Australia somehow subsidizes our wine industry for it to be able to dump or sell its product below cost on international markets is a falsehood.
“Australia will stand by our wine industry, in defending their integrity, and in responding and appealing at every appropriate juncture to these findings.
“The cumulative impact of China's trade sanctions against a number of Australian industries during the course of this year does give rise to the perception that these actions are being undertaken as a result or in response to some other factors.”
