China targets EU brandy after electric car sanctions

Beijing’s imposition of duties follows the bloc’s tariff hike amid warnings of a ‘trade war’

China has imposed provisional tariffs on brandy originating from the European Union, days after EU countries backed duties on Chinese-made electric cars.

The temporary anti-dumping levies on liquors imported from the EU will range from 30.6% to 39.0% and will come into force on October 11, the Chinese Ministry of Commerce said in a statement on Tuesday. The ministry did not specify how long the duties, which are to be paid in the form of a deposit with the Chinese customs agency, will be in effect.

China’s Commerce Ministry launched an anti-dumping investigation into EU brandy imports in January. The ministry announced in August that according to preliminary findings, European producers were selling their goods in China below market rates, threatening “substantial damage” to domestic producers.

Anti-dumping probes were also launched into pork and dairy products imported from the EU. The investigations came as Brussels initiated its own probe into Chinese-made battery electric vehicles (BEV) last year, in what has been widely described as an escalating ‘trade war’ between Beijing and Brussels.

French brands accounted for 99% of China’s brandy imports last year, with shipments reaching $1.7 billion, according to Reuters. Importers of Hennessy and Remy Martin will have to pay security deposits of 39.0% and 38.1%, respectively, the agency noted. France was one of ten EU member states that voted in support of the levies against Chinese-made BEVs last week.

High Chinese tariffs on EU brandy would leave French firms with vast amounts of cognac that could be hard to sell elsewhere, Reuters wrote in May.

European distiller stocks dropped following the announcement on Tuesday, with shares in Remy Cointreau, maker of Remy Martin cognac, falling as much as 7.7% in early trading, according to the Wall Street Journal.

The European Commission announced last week that its decision to impose tariffs of up to 35.3% on Chinese-made BEVs had received the necessary support from EU member states. The new levies, expected to come into effect at the end of October, will come on top of the EU’s standard 10% import duty on cars. Brussels has argued that the tariffs are necessary to protect European carmakers from unfair competition, as it claims Chinese companies benefit from state subsidies.

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Germany, a major car producer, voiced its objections to the tariffs along with Hungary, warning against “a trade war” and calling for a negotiated solution.