China is thus responding to the EU maintaining its plan for additional customs duties on its electric vehicles sold in Europe.
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The tariff war between the EU and China has reached a new level, with China announcing that it will apply anti-dumping measures on brandy imported from the European Union. This measure is seen as a response to the EU, which recently decided to increase customs duties on Chinese electric cars.
Although these measures are temporary, they are expected to be a major blow to brandy brands such as Rémy Martin and Hennessy. Rémy Martin is owned by Rémy Cointreau and Hennessy by Louis Vuitton Moët Hennessy (LVMH).
At the opening of the Paris stock exchange, the shares of Rémy Cointreau plunged 8.11% Tuesday morning, while those of LVMH fell 4.07%.
China’s Ministry of Commerce said that after preliminary investigations, the government had determined that the domestic brandy sector was “threatened substantial damage and that there was a causal relationship between the dumping and the threat of substantial damage“.
The new tax means Chinese companies importing brandy from the EU will now have to provide security deposits, which can go up to 39% of the total value of the import. This requirement is expected to come into effect from October 11.
Currently, the security deposit rate for Rémy Martin is 38.1%, while Hennessy will have to pay the higher rate of 39%.
France is expected to be most affected by this decision, since China imported up to 99% of its brandy from France in 2023. Other French products imported by China include cosmetics and aircraft, (Airbus).
Furthermore, the main Chinese imports from Italy are pharmaceutical products, with copper being the main import from Spain. The main German imports from China are sedans, (Mercedes, BMW, or VW), with semiconductor manufacturing parts being the most imported product from the Netherlands.
China hits back at EU after raising tariffs on its electric vehicles
China’s latest move against European brandy imports follows the EU’s recent revelation that its planned tariffs on Chinese electric vehicles imported into the bloc could reach 45%.
The move increased tensions between the EU and China, which have escalated despite numerous attempts by Brussels and Beijing to find a mutually acceptable solution.
China has also suggested thatshe might not stop at brandy and consider imposing tariffs on other goods such as imports of pork, dairy products and vehicles from the European Union. If so, this could be bad news for German automakers such as Mercedes-Benz, Audi and BMW, in particular, as they have several production sites in China, which is also one of their main markets.
Pour Russ Mouldinvestment director at AJ Bell, “China continues to have tit-for-tat trade disputes, centered on accusations of unfair competition and protectionism.”
“It imposed anti-dumping measures on brandy imported from the EU, sending shares of six major drinks companies tumbling. Rémy Cointreau, Pernod Ricard and Diageo were all affected by the news, representing a new point of tension between the Asian country and the West. This could drive up the price of these products for consumers and result in reduced sales of EU-originated brandy if consumers seek cheaper alternatives “. he explains
