Could the new Labor Government herald better days for Treasury Wine shares?

Prime minister Anthony Albanese has taken staunch stance against Chinese tariffs.

| More on:
A group of people clink wine glasses in an outdoor, late afternoon setting to celebrate the rising Treasury Wine share price

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Key points

  • Treasury Wine shareholders' hopes might have been raised after Australia's new Prime Minister slammed Chinese tariffs on Australian goods 
  • The winemaker was hit hard when such tariffs were introduced in 2020. Prior to their introduction, Chinese sales accounted for 30% of the company's earnings 
  • Prime Minister Anthony Albanese told press that China's trade sanctions are unjustified and should be removed to improve relations between the two nations 

Treasury Wine Estates Ltd (ASX: TWE) shares have suffered against Chinese tariffs in recent years. The company has even decided to produce its famous Penfolds wine in the nation to avoid them.

But could Chinese sanctions change alongside Australia's government?

Newly elected Prime Minister Anthony Albanese apparently won't be letting such trade bans slide, slamming Chinese tariffs on Australian goods at this week's Quad meeting.

At the time of writing, the Treasury Wine share price is 1% higher than its previous close.

Meanwhile, the S&P/ASX 200 Index (ASX: XJO) is boasting a 0.78% gain.

Let's take a closer look at what Albanese's latest comments might mean for Treasury Wine shares.

Albanese slams Chinese tariffs

Treasury Wine shares could be in for a good run if Albanese sticks to his staunch stance against Chinese trade bans.

The Chinese Ministry of Commerce slapped Treasury Wine's products with a massive duty rate back in 2020.

Prior to the hike, China accounted for around 30% of all Treasury Wine's earnings. Their implementation understandably devastated the company's bottom line.

Now, Australia's new Labor Government's apparent push against such tariffs could bring brighter days for the Treasury Wine shares.

Albanese slammed Chinese trade sanctions this week, saying the country should drop tariffs on Australian goods to improve the relationship between the two nations.

The comments came after Chinese Premier Li Keqiang sent a letter congratulating Albanese on his election win.

"The Chinese side is ready to work with the Australian side … to promote the sound and steady growth of the China-Australia comprehensive strategic partnership," the letter stated.

But the olive branch wasn't accepted unconditionally by Australia's new leader. Speaking to press in Tokyo, Albanese said:

Australia seeks good relations with all countries. But it's not Australia that's changed, China has.

It is China that has placed sanctions on Australia. There is no justification for doing that. And that's why they should be removed.

Treasury Wine share price snapshot

The Treasury Wine share price has suffered through 2022 so far. Though, things might not be as bad as they seem.

While the company's stock has tumbled 6% year to date, it's trading relatively in line with the broader market. Right now, the ASX 200 is 5% lower than it was at the start of 2022.

Additionally, the winemaker's stock has outperformed the index over the last 12 months, gaining around 3% against the ASX 200's 1% rise.

Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Treasury Wine Estates Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Consumer Staples & Discretionary Shares

Two couples having fun racing electric dodgem cars around a track
Broker Notes

4 ASX All Ords automotive stocks to buy today: expert

The broker expects a robust outlook for the automotive sector.

Read more »

young lady checking her social media accounts with floating emoji reactions and smiling
Earnings Results

News Corp share price charges higher on strong FY25 earnings growth

Let's see what the media giant reported for FY 2025.

Read more »

Couple look at a bottle of wine while trying to decide what to buy.
Dividend Investing

Why this beaten-down ASX 200 dividend stock could be set to rebound

A leading expert gives his verdict on the “appealing income” on tap from this ASX 200 dividend stock.

Read more »

A woman smiles over the top of multiple shopping bags she is holding in both hands up near her face.
Consumer Staples & Discretionary Shares

Unveiled: FY25 reporting dates for 10 ASX 200 retail stocks

Aussie retailers due to reveal their results.

Read more »

A couple in a supermarket laugh as they discuss which fruits and vegetables to buy
Consumer Staples & Discretionary Shares

1 ASX consumer staples stock to buy instead of Coles or Woolworths shares

This ASX consumer staples stock has doubled since October 2023.

Read more »

Happy man on a supermarket trolley full of groceries with a woman standing beside him.
Share Market News

Reporting dates for 7 ASX 200 consumer staples stocks including Woolworths

Key dates for the calendar.

Read more »

A man stands with his arms folded in front of banks of unused poker machines in a darkened gaming room.
Share Market News

Macquarie tips 26% upside for this ASX 200 gaming stock

Here’s what's behind this enticing price target 

Read more »

Two happy shoppers walking together.
Share Market News

ASX 200 retail sector leads as Aussies start spending again and US keeps tariff at 10%

Consumer discretionary shares led the market sectors amid positive retail and inflation data last week.

Read more »