- China is investigating whether to raise tariffs on European large-engine vehicles and will start collecting levies on brandy.
- China announced an anti-dumping probe into European brandy in January this year after the start of the EU investigation into its electric vehicle subsidies.
China is investigating whether to raise tariffs on European large-engine vehicles and will start collecting brandy levies. This escalated a trade spat after the European Union imposed tariffs on Chinese electric vehicles.
The Ministry of Commerce said on October 8 that Beijing is considering increasing duties on imported gasoline cars with large engines. This announcement came shortly after it announced that importers of EU brandy would have to pay a deposit of as much as 39 per cent from October 11.
Germany and Slovakia, which both voted against the tariffs, would be most exposed if China imposed tariffs on car imports. Volkswagen AG Chief Executive Officer Oliver Blume has said that any possible Chinese tariffs would be particularly risky for the German automotive industry, and the company would face significant disadvantages in the Chinese market.
Most of China’s brandy imports come from France, which voted for the tariffs on Chinese cars. The ministry’s statement specifically mentioned European spirits makers controlled by Remy Cointreau and Pernod Ricard, among others.
China announced an anti-dumping probe into European brandy in January this year after the start of the EU investigation into its electric vehicle subsidies. The Asian nation said in August that it found evidence of dumping by European spirits producers in a preliminary probe but withheld levying tariffs then.
Chinese policymakers are also under pressure domestically as they battle to reach their growth targets for 2024. Beijing last month announced interest rate cuts and pledged as much as $340 billion to support the stock market, but it held back from unleashing more stimulus on Tuesday.
Shares of European carmakers and beverage firms tumbled, particularly those with high exposure to China. BMW AG shares fell more than 3 per cent, while Mercedes-Benz Group AG dropped about 2 per cent. French distiller Remy Cointreau SA sank as much as 9.3 per cent and Pernod Ricard SA dropped 4.6 per cent.
The European Commission must publish the final results of its EV investigation by the end of this month, after which the tariffs would come into effect. Chinese state media and trade groups had hinted that Beijing could raise tariffs on car imports in response to EU moves, and this is the first official confirmation by the ministry.