Brussels, Belgium – China has significantly intensified its trade dispute with the European Union by introducing provisional anti-subsidy duties on various dairy products. These new tariffs, effective from Tuesday, range from 21.9% to a substantial 42.7% on milk and cheese imports. Most affected companies are anticipating tariffs averaging around 30%. This retaliatory measure is widely seen as a direct response to the EU's recent imposition of tariffs on Chinese electric vehicles, thereby escalating friction between the two major economic blocs.
The European Commission has strongly condemned China's decision, labelling it "unjustified and unwarranted." Olof Gill, a Commission spokesperson, stated that the EU believes the investigation was based on questionable allegations and insufficient evidence. This assessment highlights the EU's contention that the grounds for the dairy tariffs are tenuous, especially considering the EU's own thorough investigative processes prior to its EV tariffs.
This latest development continues a pattern of tit-for-tat trade measures. Beijing has previously targeted EU imports, notably imposing tariffs on brandy and pork. While provisional pork tariffs were significantly reduced in their final determination last week, suggesting potential for negotiation, the dairy tariffs, which include protected origin brands like French roquefort and Italian gorgonzola, represent a broader and more impactful front in this trade confrontation.
The primary driver of this escalating friction is undoubtedly the EU's anti-subsidy investigation into Chinese electric vehicles. This investigation, which culminated in substantial tariffs being levied by Brussels, has clearly provoked Beijing, prompting a swift and forceful response. The timing of the dairy tariffs, coinciding with renewed negotiations between China and the EU on EV levies this month, suggests a strategic move by Beijing to exert pressure and potentially influence the outcome of these crucial discussions. Talks were expected to conclude last week, but no definitive announcement has been made, leaving the future of these high-stakes negotiations uncertain.
The ramifications for the European dairy sector are considerable. Beyond the immediate financial burden, which will undoubtedly affect export volumes and profitability, the move also carries symbolic weight. It underscores the vulnerability of key European industries to geopolitical trade disputes and highlights the complex interconnectedness of global supply chains. Major European luxury goods conglomerates will be observing these developments closely, as the precedent set by these dairy tariffs could have wider implications for their own exports.
The situation remains fluid, with the provisional nature of the dairy duties offering some hope for de-escalation. China has shown a capacity to adjust its trade measures, as demonstrated by the revised pork tariffs. However, the current climate of distrust and retaliatory actions suggests that a swift resolution to this complex trade imbroglio is far from guaranteed. European diplomats are reportedly engaged in ongoing efforts to navigate this increasingly fraught diplomatic and economic landscape, seeking a path towards dialogue and a reduction in trade barriers. The coming weeks will be critical in determining whether this latest salvo leads to further entrenchment or opens a channel for more constructive engagement.