China has imposed anti-dumping policies on EU brandy following the bloc’s vote to impose tariffs on Chinese EVs last week. The move is being seen as a retaliatory measure and could fuel fears that a US-style trade war with China has arrived in Europe.
The measure will force brandy importers from the EU to put down security deposits ranging from 34.8% to 39%. The move seemed targeted to France as the country accounts for 99% of brandy imports into China. Last year, imports were worth $1.7b.
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Back in May, cognac makers already feared being caught up in the middle of a trade dispute. Raphaël Delpech, the director general of France’s cognac governing body, said the industry felt like they were “being held hostage to things that have absolutely nothing to do with us and that we can be eliminated from the landscape with a stroke of the pen.”
The Chinese Commerce Ministry said it made its decision based on preliminary findings that European companies were selling brandy at below-market prices. The ministry said these practices have resulted in “substantial damage” to the domestic brandy industry.
The ministry also issued a subtle warning that there could be more measures to come. They said its anti-dumping and anti-subsidy probe into EU pork products was underway and that a decision would be made once it concludes. They also warned of a potential tariff on large-engine vehicle engines, which would particularly hurt Germany.
The move comes after the EU voted to adopt a controversial tariff on Chinese EVs last week. There was strong opposition from Germany, who warned that the move would backfire and be a “fatal” blow to the auto industry. Germany is in a particularly tough spot. While Chinese state subsidies to automakers undercut local production in Germany, their auto industry exports heavily to the Chinese market. German Chancellor Olaf Scholz said he feared the move would be “harming ourselves.”
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By GlobalDataOn the other hand, France’s Macron has been a strong proponent. He said the EU “could die” if it didn’t change its “classical” free trade approach in the face of aggressive subsidies. He added, “When both the US and China do not respect the rules we should not be the only one in the room to just abide by the rules.”
Hungarian leader Viktor Orban, known to be friendly with China, said the raising of EV tariffs would incite an “economic cold war.”
EU must decide
As the US’s trade war with China continues, the EU is having its moment in the tariff limelight. The “tit-for-tat” move by China will likely confirm the fears of those who opposed the EV tariffs and will strengthen arguments to pursue trade disputes through negotiations.
