China has imposed tariffs on European brandy, marking a significant escalation in the trade dispute with the EU over electric vehicles.
- The Chinese commerce ministry labels the brandy tariffs as anti-dumping measures to protect local businesses.
- The EU plans to challenge these tariffs at the WTO, describing them as an abuse of trade measures.
- French brandy producers, especially Hennessy and Remy Martin, are among those affected, facing catastrophic consequences.
- The conflict originates from the EU imposing up to 35% tariffs on Chinese electric vehicles, leading to further tensions.
China has imposed tariffs on European brandy in response to the EU’s tariffs on Chinese electric vehicles, escalating the ongoing trade conflict between the two economies. The Chinese commerce ministry has described this move as an ‘anti-dumping’ measure intended to safeguard domestic production from the adverse impacts caused by European imports. Meanwhile, the European Commission has announced plans to challenge these measures at the World Trade Organization (WTO), condemning them as an ‘abuse’ of trade defence mechanisms.
French Trade Minister Sophie Primas has criticised the brandy tariff as retaliatory and ‘unacceptable’, viewing it as a breach of international trade agreements. France is particularly vulnerable, as it accounts for 99% of the brandy exported to China, with major brands like Hennessy and Remy Martin expected to suffer significantly. Experts within the industry have warned of ‘catastrophic’ consequences on these businesses.
The French cognac group BNIC has urged both French authorities and the EU to take action, highlighting that the brandy sector is being caught in the crossfire of a dispute unrelated to its industry. Following the announcement of these tariffs, shares of luxury brands involved in brandy production have seen a downturn, with LVMH dropping over 3% and Remy Cointreau falling more than 8%.
Analysts predict that these tariffs could lead to a 20% price increase for Chinese consumers. This is expected to cause a potential decrease of 20% in sales volumes and revenues for European suppliers. The brandy tariff situation reflects escalating tensions, following the EU’s decision to impose tariffs as high as 35% on Chinese electric vehicles.
In anticipation of further economic measures, China is considering imposing tariffs on other European products such as cars, pork, and dairy. The broader implications of this trade dispute have caused apprehension among German carmakers like Volkswagen, Porsche, Mercedes-Benz, and BMW, whose shares have also been negatively impacted.
The tariff dispute underscores rising tensions in EU-China trade relations, with significant impacts on both economies.
