China will impose taxes on Australian wine of up to 212%, starting on Saturday.
Its commerce ministry said these were temporary anti-dumping measures to stop subsidised imports of Australian wine.
The duties will range from 107% to 212%, intensifying trade tensions between the two countries.
In recent months, Beijing has targeted Australian imports including coal, sugar, barley and lobsters amid political tensions.
Officials in China have argued that some Australian wine is being sold cheaper there than in its home market through the use of subsidies. Australia has rejected that assertion.
China is the biggest destination for Australia’s wine exports, accounting for 39% in the first nine months of 2020, according to Wine Australia.
China has been carrying out a year-long investigation into anti-dumping, looking at wines being sold in China at prices alleged to be lower than in Australia.
Australia’s agriculture minister David Littleproud reacted to the announcement via Twitter, saying the government was “extremely disappointed”.
“The Australian government categorically rejects any allegation that our wine producers are dumping product into China,” he said.
“Australian wine is hugely popular both in China and across the globe due to its high quality and we are confident that a full and thorough investigation will confirm this.”
Australia’s trade minister Simon Birmingham said the new tariffs make Australian wine unviable and unmarketable 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.
Mr Birmingham has raised the idea of taking China to the World Trade Organisation (WTO) over the restrictions.