In a significant escalation of trade hostilities, China has levied provisional tariffs on a range of European Union dairy products. Brussels has swiftly condemned this move as both "unjustified and unwarranted," perceiving it as a retaliatory strike. The imposition of duties, effective from Tuesday, is widely seen as Beijing's response to the EU's recent anti-subsidy investigation into Chinese electric vehicles.
The European Commission is meticulously scrutinising China's decision and intends to present its findings to Chinese authorities. A spokesperson articulated the EU's stance, stating that the investigation is based on questionable allegations and insufficient evidence. This latest development signals a deepening rift in the economic relationship between these two global powerhouses, adding complexity to ongoing trade disputes.
The provisional duties, ranging from 21.9% to 42.7%, are expected to impact approximately 30% of affected companies' exports. Targeted products include staples like milk and various cheeses, potentially affecting well-known European specialities. While currently provisional, its immediate effect casts a shadow of uncertainty over the EU's significant dairy sector. This follows a pattern of escalating trade friction that erupted in 2023, further strained by previous Chinese tariffs.
This situation is inextricably linked to the EU's ongoing probe into subsidies for Chinese electric vehicles, a focal point of contention this month. The European Commission has voiced concerns that the evidence underpinning China's investigation into its dairy imports is flimsy. This mirrors previous instances where China has moderated the impact of its tariffs on other goods.
The implications of these new tariffs extend beyond immediate financial burdens on EU dairy producers. They underscore a broader trend of increasing protectionism and tit-for-tat measures in global trade. While specific European cheese brands are likely to be directly affected, the wider impact on the EU dairy industry's export capabilities remains to be fully assessed. The situation also raises questions about the future of trade relations, especially concerning other high-value European exports. Prominent French luxury goods conglomerates, previously spared from retaliatory tariffs, may find themselves in a more precarious position should the trade war widen its scope.