China has imposed taxes on European brandy imports, widely viewed as retaliation for the European Union’s recent imposition of steep tariffs on Chinese electric vehicles. The European Commission has condemned China’s brandy tariffs, labeling it an ‘abuse’ of trade defense mechanisms, and plans to challenge the new duties at the World Trade Organization (WTO).
China, however, defended its decision, describing it as an ‘anti-dumping’ measure aimed at safeguarding its domestic producers. The new tariffs will significantly affect major French brandy brands such as Hennessy and Remy Martin, sparking concerns in France. French trade officials and industry representatives have expressed alarm over the development, warning of the potential economic impact on brandy producers.
Sophie Primas, France’s Trade Minister, criticized the tax as an act of retaliation following the EU’s decision to increase tariffs on Chinese-made electric vehicles, calling it ‘unacceptable’ and a violation of international trade rules. Primas vowed to work with the EU to address the issue through the WTO.
The French cognac lobby group BNIC expressed deep concern, describing the situation as ‘catastrophic’ for the industry. France is the primary exporter of brandy to China, accounting for 99% of shipments, and the BNIC urged authorities to intervene before the damage becomes irreversible. They also warned that the new duties could cause severe financial losses for producers.
Following the announcement, shares in major European spirits producers took a hit, with luxury goods firm LVMH, which owns Hennessy, seeing its stock fall over 3%. Remy Cointreau, producer of Remy Martin, experienced an even steeper drop of more than 8%. Analysts from Jefferies predict that the new tariffs could lead to a 20% price hike for consumers, likely resulting in a major decline in sales and volumes.
Beyond the brandy industry, shares in several German carmakers, including Volkswagen, Porsche, Mercedes-Benz, and BMW, also declined amid fears that they could be targeted in China’s ongoing tariff escalation. As the situation unfolds, more EU products, including cars, pork, and dairy, may face new tariffs from China.
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