Economy: China hits back at EU tariffs with explosive investigation!

Tensions between China and the European Union are rising with recent trade measures. While Brussels targets Chinese electric vehicles with new tariffs, Beijing responds by investigating a key European export sector.

Anti-dumping investigation into European brandy in China

Last Friday, China stepped up its anti-dumping investigation into European brandy imports, announcing a public hearing for July 18. The move coincides with the European Union imposing provisional tariffs of up to 37.6% on Chinese electric vehicles.

The Chinese measure aims to assess whether European producers, including Martell, Rémy Martin and Hennessy, are selling their products below market prices, an accusation they will have the opportunity to contest at this hearing in Beijing. The meeting was requested by European cognac houses, including Martell and Société Jas Hennessy & Co., which are determined to defend their position.

The move comes as trade relations between Brussels and Beijing have become increasingly strained. In January, Beijing launched a similar investigation into brandy imports and, in June, another into pork shipments from the EU.

China has made it clear that it wants to continue negotiations to avoid tariff escalation, but is prepared to take whatever measures are necessary to protect its industries. The four-month period during which the EV tariffs remain provisional will be crucial, with intensive talks between the two sides expected to continue in an attempt to find common ground.

Consequences and reactions of stakeholders

China’s response to the EU’s provisional tariffs on electric vehicles was swift. Beijing immediately stepped up its investigation into imports of European brandy and launched a new probe into European pork, affecting exports from France and Spain, two of the most vocal supporters of the EU’s tariff measures.

In addition, China is considering additional investigations into dairy products and combustion-engine cars from Europe, in an apparent attempt to pressure countries like Germany, where automakers make a third of their sales in China. The move is intended to divide European supporters of the tariffs while signaling Beijing’s determination to protect its economic interests.

Meanwhile, the European Union has confirmed that provisional tariffs of 37.6% on Chinese electric vehicles are now in effect, with a four-month period for manufacturers to comment on the measures. Meanwhile, Chinese companies such as SAIC Motors, Geely and BYD are feeling the initial impact, with their shares in Hong Kong already falling.

Analysts say the escalation could seriously disrupt the Sino-EU economy and trade relations if no solution is found. The situation is all the more complex as Beijing has accused Brussels of using anti-dumping investigations to spy on Chinese supply chains, fueling tensions and uncertainty for industries on both sides.

As talks between China and the EU continue, the outcome of this tariff showdown remains uncertain. Relevant industries are watching every move closely, aware that the decisions taken could have major repercussions on the economy, trade and global economic stability.