Beijing has ramped up its anti-dumping probe into European brandy imports, with the Chinese commerce ministry scheduling a hearing on July 18 to delve into allegations of European producers selling brandy in China at artificially low prices. The ministry aims to scrutinize the reasons behind the lower prices and assess any detrimental impact on the Chinese liquor industry.
This move coincides with the European Commission's implementation of additional provisional tariffs on Chinese-made electric vehicles, ranging from 17.4% to 37.6%, as a measure to counter what the EU perceives as unfair government support for Chinese car manufacturers.
Following the EU's tariff imposition, a Chinese state-backed auto association expressed strong dissatisfaction, labeling the tariffs as unacceptable and hinting at potential retaliatory actions from Beijing.
Stakeholders are bracing for possible retaliatory measures from China, with the CFO of LVMH, owner of Hennessy cognac, highlighting the interconnectedness of global conflicts impacting regional players like themselves.
If China decides to impose tariffs post the probe, French cognac producers, who accounted for 99% of China's imported brandy last year, could face significant repercussions, given the substantial $1.74 billion value of French brandy imports into China.
The anti-dumping investigation initiated by China in January against European brandy was widely viewed as a response to the EU's scrutiny of alleged unfair state subsidies to Chinese EV manufacturers.
While talks between the EU and China are ongoing, the European Commission has indicated that if no agreement is reached, the tariffs on Chinese EVs will become definitive in November.
Beijing has reiterated its commitment to safeguarding China's interests and has hinted at potential retaliatory actions against EU pork imports, with an ongoing anti-dumping probe already launched on pork imports.
Bank of America analysts have pointed out that China could extend its retaliatory measures to include European agricultural goods, aviation, and cars with large engines, underscoring the escalating trade tensions between China and the EU.
