If the trade war winds down, why might we see more security measures on wine bottles? Alex and Justine discuss how vineyard pests and the rise of China’s billionaire class have fueled record wine prices. Filmed on October 22, 2018.
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Why Counterfeit Wine Matters | The Knock-On Effect #21 | Real Vision™
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Transcript:
If the trade war has a peaceful ending, wine bottles will get a lot more complicated.
OK. So if we have a peaceful ending to this trade war, we're going to have more complex wine bottles.
And perhaps more complex wines. Welcome to The Knock-On Effect.
Welcome to the show where we start with a thing you know and end up in a strange place. I'm Alex Rosenberg, joined by my fine and rare co-host, Justine Underhill.
Hello, hello.
Hello. I am going try to get you from tariff venom to tipple vessels. And your job is to figure out where I'm going.
From where to where?
Tariff venom.
Tariff venom--
To tipple vessels.
Tipple vessels.
Tipple being a drink, if you you. You job is to figure out where I'm going before I get there. With that in mind, Justine--
Well, as we've learned in other Knock-On Effect episodes--
Yes. And this has a lot of-- there's a lot of crossovers and tie-ins.
Yeah. I feel like we can bring in some of our previously learned knowledge. So there's a wonderful episode you did about the wine industry. And so my guess is that maybe wine bottle manufacturers are in the crosshairs somehow of the trade war. Because glass is a very important industry. Is this--
That might be correct, but that's not where I'm going today. So starting with the thing we do know, which is the trade war, the tough talk and the tough actions-- the US has levied tariffs on-- I love "has levied tariffs." Isn't that great? On $250 billion worth of Chinese goods. China retaliated, issuing tariffs on $110 million. The US could issue tariffs on another $300 billion.
Why do you like the word levy?
I think it's just levied, because you only hear it with tariffs. It's one of those verbs that's only associated with a particular noun. So there's been this tit-for-tat, and China has called off trade talks. So it only looks to continue. So the base case is definitely not that the trade war eases up. And it's just affected China.
So recent GDP numbers-- always a but suspect in China, yes, I know. But recently, they're growing at the slowest pace since 2009, a rate of just 6.5%. And the stock market and the currency markets have been in a bit of trouble now. We're recording this on Monday. The stock market is rising due to some talk about tax cuts, maybe a page from Trump's book with talking about tax cuts. But the overall lesson is that China is imperiled by what's going on with trade.
And I guess the big question is how long can this sort of trade war last. In one sense, the US can levy tariffs on a bunch of Chinese goods, but China can't retaliate at the same amount of force. Because guess what? China doesn't import as many US goods as the US imports of Chinese goods. So that creates a bit of an imbalance there.
Yeah, sure. And actually, I could say more about this. I'm going to toss to a clip of AK, who, in the latest episode of Real Vision's latest show, The One Thing, discussed this dynamic and how China is particularly feeling the pain.
AK: China is facing major issues because they haven't shifted to a consumer-based economy like the US. They're completely dependent on exports, and their leveraged out of their mind with all their debt spending. The US, on the other hand, has a self-sustaining economy. We've got everything we need in-house. We've got manufacturing, natural resources, consumers, investors. Absolutely everything, we've got. We're just like Sears-- well, you know, Sears from back in the day. And this means that we're in a great position against China when it comes down to a trade war.
By the way, everyone check out the show. Good job, AK. And so the point is that if the US takes a step back from the trade war.
