China has imposed anti-dumping policies on EU brandy following the bloc’s vote last week to impose tariffs on Chinese electric vehicles. The move is seen as a retaliatory measure and could fuel fears that a US-style trade war with China has broken out in Europe.
The measure will force cognac importers from the EU to post a deposit of 34.8% to 39%. The move seemed aimed at France, as the country is responsible for 99% of cognac imports into China. Last year imports amounted to 1.7 billion dollars.
In May, cognac makers already feared that they would find themselves in the middle of a trade conflict. Raphaël Delpech, the director general of France’s cognac board, said the industry felt like it was “being held hostage by things that have absolutely nothing to do with us and that with the stroke of a pen we can be eliminated from the landscape.”
China’s Commerce Ministry said it made its decision based on preliminary findings that European companies were selling cognac at below-market prices. The ministry said these practices have resulted in “substantial damage” to the domestic brandy industry.
The ministry also subtly warned that more measures may follow. They said the anti-dumping and anti-subsidy investigation into EU pork products was ongoing and a decision would be made once it was completed. They also warned of a possible tariff on vehicle engines with large engines, which would especially hurt Germany.
The move comes after the EU voted last week to impose a controversial tariff on Chinese electric vehicles. There was strong opposition from Germany, which warned the measure would be counterproductive and a ‘fatal’ blow to the car industry. Germany is in a particularly difficult situation. While Chinese state subsidies to carmakers undermine local production in Germany, their car industry exports heavily to the Chinese market. German Chancellor Olaf Scholz said he feared the move would “harm ourselves.”
On the other hand, France’s Macron has been a strong supporter. He said the EU “could die” if it did not change its “classic” free trade approach in the face of aggressive subsidies. He added: “If both the US and China don’t respect the rules, we shouldn’t be the only ones in the room just following the rules.”
Hungarian leader Viktor Orban, known as a friend of China, said the increase in EV tariffs would spark an “economic cold war.”
The EU must decide
As the US trade war with China continues, the EU is having its moment in the tariff spotlight. China’s “tit-for-tat” move is likely to confirm the fears of those who opposed the EV tariffs and strengthen the case for pursuing trade disputes through negotiations.
“China imposes tariffs on EU brandy after EV vote last week” was originally created and published by Investment Monitor, a brand owned by GlobalData.
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