Threat of Increased Tariffs on Brandy Imports in China

Could this signal a major trade dispute with the EU?

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Is Cognac becoming a sacrificial pawn in a deeper trade dispute between the EU and China? (Photo: xy/
Is Cognac becoming a sacrificial pawn in a deeper trade dispute between the EU and China? (Photo: xy/

China has initiated an anti-dumping investigation against brandy imports from the European Union, as reported by The Drinks Business. This move is reminiscent of the trade dispute with Australia and is widely interpreted as a prelude to imposing higher tariffs. There's speculation that import tariffs on EU brandy, currently at 5%, might rise to 16%. This increase is relatively modest compared to the tariffs on Australian wines.

Following this announcement from China, stock prices of major French spirit companies have seen a downturn. Rémy Cointreau's shares dropped by 16.5%, Pernod Ricard by 7.6%, and LVMH by 2%, according to consistent media reports. These corporations had already reported declining sales figures for Cognac. In the first eleven months of 2023, China imported brandy worth approximately €1.43bn, predominantly Cognac.

The official reason cited by China for this investigation is the observed average price reduction of 15.9% on brandy imports from the EU, as noted by Decanter. However, from a European perspective, this seems to be a retaliatory measure in response to the EU's anti-dumping investigations into imports of electric vehicles, components, and biodiesel products from China. In this context, EU subsidies in viticulture provide the Chinese with additional arguments.

The Bureau National Interprofessionnel du Cognac (BNIC) also suspects these actions to be retaliatory due to the ongoing trade dispute between the EU and China. Nevertheless, they have stated their intention to fully cooperate with the Chinese authorities.

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