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America and the tea tax

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If America sneezes the world catches a cold, so the old saying goes. How is this important to tea? Well on September 1st the Trump Administration plans to place a 10 percent tax on all the tea imported from China. Such a move will inevitably filter down to worldwide tea prices.

America should know better about the importance of tea, after all it was in Boston Harbor that the price of tea started a revolution that ultimately expelled the British from the Continent. Trumps threat to impose a $300 billion round of tariffs on China on September 1st will have consequences too.

In a series of tit for tat moves China and the USA are playing a dangerous game of cat and mouse with neither side showing signs of backing down despite large losses on worldwide stock markets. This is because tea is a vital global commodity that powers the global economy.

Last year the US imported 19.4 million metric tons of Chinese tea, but this only equates to 5.9 percent of China’s tea exports and only 0.825 percent of their production. It is likely that American tea drinkers will feel this tax in their wallets as the price of 100 teabags will likely rise from $6 to around $7.50 per box.

The Tea Association of the USA testified that “Imposing punitive tariffs on tea would not be effective in changing [China’s trade practices] because tea exports are a very small part of China’s overall tea sector. Most tea that China produces is consumed domestically.  Further, punitive tariffs would have a disproportionate economic impact on small and medium-sized enterprises because most of the U.S. importers (those that pay the tariffs) are small businesses.”

 

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