China Hits Back at EU with Countermeasures Following Tariff Increase

In reaction to the tariffs imposed by Brussels on electric vehicles, Beijing has decided to investigate brandy imports from the European Union.

The Chinese capital announced its latest step in the ongoing investigation into imports of brandy from the EU, following the roll-out of provisional duties by the EU on electric vehicles sourced from China.

From Thursday onwards, the EU has applied additional tariffs on Chinese EV imports ranging between 17.4% and 37.6% over the existing 10% duties, holding Beijing accountable for their "unfair subsidization" of car makers.

The subsequent day, the Chinese Ministry of Commerce reacted by publicizing a hearing scheduled for July 18, to address allegations that brandy producers from the EU are trading their products in China below standard market rates.

The hearing, requested by Martell, Societe Jas Hennessy & Co., Remy Martin, amongst others, plans to evaluate "the industrial harm, causality, and public interest" in the anti-dumping investigation related to brandy products, as stated by the ministry.

Furthermore, the ministry continued that the Chinese examination will delve into the EU-produced brandy shipped in containers holding under 200 liters between October 2022 and September 2023. It also aims to scrutinize the purported injury caused to the Chinese brandy sector from January 2019 through to September 2023.

On the other hand, the Chinese Chamber of Commerce lashed out at the EU’s tariffs, denouncing them as "politically driven" and "protectionist", and openly expressed its aspiration to resolve the disagreement through dialogue.

However, the EU nations appear divided on this issue, with Germany, in particular, showing concern. The country which sees a third of auto sales in China fears these restrictions may cause more harm than good.

The move has been reportedly labeled as "detrimental" by the automobile behemoth, Volkswagen, while the head of BMW suggests that the tariff war is a "dead-end".

The volume of EU's imports of Chinese EVs rocketed to $11.5 billion in 2023, an upshot from a mere $1.6 billion in 2020. This constitutes 37% of all EV imports to the EU, as indicated by recent studies.

In the previous year, the European Commission initiated an inquiry with accusations against subsidies that allowed Chinese EVs to be offered at significantly lower prices than those produced within the EU.

Beijing consistently urges the EU to abolish its EV tariffs, cautioning that it would not remain passive in the face of such measures and highlighting its readiness to negotiate. Earlier in January, Beijing commenced the first reciprocal anti-dumping examination on EU brandy imports and introduced a second probe into the bloc's pork shipments in June.