China’s recent imposition of anti-dumping measures against European brandy, in response to EU tariffs on electric vehicles. In this way, the increase in trade tensions between both powers is triggered.
China took commercial retaliation against the European Union by imposing “anti-dumping” measures on brandy imports from the bloc, affecting well-known French brands such as Hennessy and Remy Martin. This decision comes a few days after Brussels approved tariffs on electric vehicles (EV) of Chinese origin. According to the Chinese Ministry of Commerce, a preliminary investigation concluded that imports of European brandy could cause “substantial damage” to its local industry.
The French Ministry of Commerce criticized China’s decision, calling it “incomprehensible” and contrary to the principles of free trade. France has expressed its intention to work with the European Commission to bring the case to the World Trade Organization (WTO).
Trade tensions between China and Europe continue to escalate, as the Chinese government announced that it is also reviewing other European imports, such as pork products and vehicles with large engines, which would mainly affect German manufacturers. Exports of cars with large engines, worth $1.2 billion in 2023, could be hit if tariffs increase.
Trade war between the EU and China
Beijing’s investigation into French brandy is seen as a direct response to France’s support for tariffs on Chinese EVs. In 2023, brandy exports from France to China reached $1.7 billion, representing almost all of Chinese imports of this drink.
From October 11, EU brandy importers will have to pay deposits ranging between 34.8% and 39% of the import value. The cognac producer group BNIC considers these measures to be a clear response to the EU’s actions against Chinese EVs. For his part, French President Emmanuel Macron called the cognac investigation “pure retaliation.”
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Shares of major luxury brands, such as LVMH, owner of Hennessy and Remy Martin, have suffered notable falls in the markets. Companies face security deposits that will make imports more expensive, although they could be returned if an agreement is reached before the imposition of final tariffs. The uncertainty about the negotiations between the EU and China keeps the affected companies in suspense.
Pernod Ricard and Remy Cointreauother impacted firms, have not responded to requests for comment. Analysts predict a 20% price increase in the Chinese market, which could reduce sales by 20%, severely affecting companies like Remy, which is significantly dependent on the Chinese market.
Source: Ambito
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