**Brussels, Belgium** – In a significant escalation of trade hostilities, China has levied provisional tariffs on a range of dairy products originating from the European Union, a move that Brussels has swiftly condemned as both "unjustified and unwarranted." The imposition of duties, effective from Tuesday, is widely perceived as a retaliatory strike by Beijing in response to the EU's recent anti-subsidy investigation into Chinese electric vehicles.
The European Commission, the EU's executive arm, has announced that it is meticulously scrutinising China's decision and intends to present its findings to Chinese authorities. 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 latest development signals a deepening rift in the economic relationship between the two global powerhouses, adding another layer of complexity to ongoing trade disputes.
The provisional duties, which will range from a substantial 21.9% to a considerable 42.7%, are expected to impact approximately 30% of most affected companies' exports. The targeted products include staples such as milk and a variety of cheeses, potentially affecting well-known European specialities. While this decision is currently provisional and could be subject to revision in a final ruling, its immediate effect is to cast 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 China's earlier imposition of tariffs on EU brandy and pork.
The current situation is inextricably linked to the EU's ongoing probe into subsidies for Chinese electric vehicles, which has been a focal point of contention this month as negotiations between the two blocs resumed. The European Commission has voiced concerns that the evidence underpinning China's investigation into its dairy imports is flimsy and based on unsubstantiated claims. This mirrors previous instances where China has, in some cases, significantly reduced or moderated the impact of its tariffs on other goods, such as its final decision last week on pork tariffs, which saw a considerable reduction in provisional duties.
The implications of these new tariffs extend beyond the immediate financial burden on EU dairy producers. They underscore a broader trend of increasing protectionism and tit-for-tat measures within global trade, particularly between China and the West. While French Roquefort and Italian Gorgonzola, brands enjoying protected origin status, 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. Notably, prominent French luxury goods conglomerates such as Pernod Ricard, LVMH, and Rémy Cointreau, which produce sought-after cognacs and were previously spared from retaliatory tariffs, may find themselves in a more precarious position should the trade war continue to widen its scope. The ongoing dialogue regarding EU electric vehicle tariffs, though currently underway, is clearly facing significant headwinds due to these retaliatory actions.