Reuters reports that China's decision to impose a tariff of 80.5% on barley imports from Australia is "deeply disappointing", Australia's Minister for Trade Simon Birmingham said on Monday.

China earlier said it would impose anti-dumping and anti-subsidy duties on barley imports from Australia from Tuesday, escalating bilateral tensions between the two countries.

Birmingham said Australia has not subsidised or dumped barley to China.

'Australia is deeply disappointed with China's decision to impose duties on Australian barley,' Birmingham said in an emailed statement.

• China confirms 80% tariff on Australian barley

Market implications

Australia is a dominant player in world barley export markets, representing 30-40 percent of the world’s malting barley trade and 20 percent of the feed barley trade. AEGIC Research says that Australia is a major exporter of barley, representing more than 40 percent of the world's malting barley trade and 20 percent of the feed barley trade.

Australia's barley exports to China were worth $600 million in 2019, falling from $1.5 billion in 2018 because of drought and an effort to diversify into more markets, according to ABC News. 

Western Australian farmers will feel the brunt of the tariffs; about 88 per cent of barley exports to China come from WA.

AUD trades as a proxy to global trade wars and Chinese affairs. This is a direct blow that can only weigh further on AUD. Meanwhile, AUD has been riding a broader risk-on sentiment to 0.6527 as the US dollar unwinds. 

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