In a bold move, China has imposed tariffs on European brandy, directly affecting major French exporters in retaliation for EU’s tariffs on Chinese electric vehicles.
- The Chinese commerce ministry has termed this a protective anti-dumping measure.
- France is disproportionately affected, with 99% of brandy exports to China at stake.
- French luxury brands, including Hennessy and Remy Martin, brace for significant financial impact.
- China hints at expanding tariffs on other European goods, escalating trade tensions.
The Chinese commerce ministry has implemented new tariffs on European brandy, describing it as an anti-dumping measure. This decision aims to protect domestic producers from the adverse effects of European imports. The action is seen as a direct response to the European Union’s recently imposed tariffs of up to 35% on Chinese electric vehicles.
French Trade Minister Sophie Primas has denounced this tariff as retaliatory and a breach of international trade rules. The situation is especially detrimental to France, which dominates the brandy export market to China, contributing 99% of the total exports. Major French brands such as Hennessy and Remy Martin are poised to suffer substantial economic losses.
Industry observers predict catastrophic consequences for French exporters, with shares of luxury brands like LVMH and Remy Cointreau experiencing declines following the tariff announcement. Specifically, LVMH saw a drop of over 3%, while Remy Cointreau witnessed a fall exceeding 8%. These tariffs could potentially result in a 20% price increase for Chinese consumers, coupled with a corresponding decline in sales volumes and revenues for suppliers.
The French cognac lobby group, BNIC, has called for intervention from French authorities and the European Union. The group argues that brandy producers are caught in a geopolitical conflict unrelated to their industry. This appeal underscores the urgency and gravity of the situation, as industry leaders seek a resolution to this trade impasse.
Following the EU’s actions, China has signaled a possibility of imposing tariffs on other European products, including cars, pork, and dairy. This potential expansion of tariffs could impact shares in major German carmakers such as Volkswagen, Porsche, Mercedes-Benz, and BMW, as they brace for possible inclusion in the trade dispute.
The ongoing tariff dispute highlights escalating trade tensions between China and the European Union, with significant economic stakes for both sides.
