**Brussels, Belgium –** In a significant escalation of its trade dispute with the European Union, China has announced the imposition of provisional anti-subsidy duties on a range of dairy products originating from the bloc. The move, effective from Tuesday, sees duties ranging from 21.9% to a substantial 42.7% applied to milk and cheese imports, with the majority of affected companies anticipating tariffs of around 30%. This retaliatory action is widely interpreted as a direct response to the EU's recent tariffs on Chinese electric vehicles, further intensifying a burgeoning trade conflict between the two economic powerhouses.
The European Commission has vociferously condemned China's decision, deeming it "unjustified and unwarranted." Olof Gill, a spokesperson for the Commission, articulated the EU's stance, stating, "The commission’s assessment is that the investigation is based on questionable allegations and insufficient evidence, and that the measures are therefore unjustified and unwarranted." This assessment underscores the EU's contention that the grounds for the dairy tariffs are tenuous, particularly given the EU's own rigorous investigative processes preceding its EV tariffs.
This latest development marks a continuation of tit-for-tat trade measures. Beijing has previously targeted EU imports, notably imposing tariffs on brandy and pork. While provisional duties on pork were significantly reduced in their final determination last week, signalling a potential for nuanced negotiation, the imposition of tariffs on dairy products, including cherished protected origin brands like French roquefort and Italian gorgonzola, represents a broader and more impactful front in this trade confrontation.
The underlying cause of this escalating friction is undeniably the EU's anti-subsidy investigation into Chinese-manufactured electric vehicles. This investigation, which culminated in substantial tariffs being levied by Brussels, has clearly irked Beijing, prompting a swift and forceful response. The timing of the dairy tariffs, coming as negotiations between China and the EU regarding the EV levies have recommenced this month, suggests a strategic manoeuvre by Beijing to exert pressure and potentially influence the outcome of those crucial discussions. Talks were scheduled to conclude last week, but as yet, no definitive announcement has been made, leaving the future trajectory of these high-stakes negotiations shrouded in uncertainty.
The ramifications for the European dairy sector are considerable. Beyond the immediate financial burden imposed by the tariffs, which will undoubtedly impact export volumes and profitability, the move also carries symbolic weight. It highlights the vulnerability of key European industries to geopolitical trade disputes and underscores the complex interconnectedness of global supply chains. Major European luxury goods conglomerates, such as Pernod Ricard, LVMH, and Rémy Cointreau, which have previously faced similar retaliatory measures on their cognac exports, will be watching these developments with keen interest, as the precedent set by the dairy tariffs could have wider implications.
The situation remains fluid, with the provisional nature of the dairy duties offering a sliver of hope for de-escalation. China has demonstrated a capacity to adjust the impact of its trade measures, as evidenced by the revised tariffs on pork. 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 in Beijing are reportedly engaged in ongoing efforts to navigate this increasingly fraught diplomatic and economic landscape, striving to find a path towards dialogue and a reduction in trade barriers. The coming weeks will be critical in determining whether this latest salvo in the trade war leads to further entrenchment or opens a channel for a more constructive engagement.