China hits EU brandy imports with anti-dumping penalties

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China will impose new anti-dumping measures on EU brandy imports, escalating the trade war between Beijing and Brussels just days after the bloc slapped higher tariffs on Chinese electric vehicles.

The Chinese commerce ministry said in a statement on Tuesday that it would require a security deposit from EU brandy importers beginning on Friday.

Shares in French luxury group LVMH, owner of Hennessy cognac, dropped 4.3 per cent in early trading in Paris on Tuesday after the announcement, while Martell owner Pernod Ricard fell 2.7 per cent and Rémy Cointreau nearly 4.8 per cent.

The latest salvo in the biggest trade dispute between China and Europe in a decade came after EU members voted on Friday to approve steep tariff increases on Chinese EVs.

As the EU-China trade war has expanded from automobiles to agriculture, Beijing has launched anti-dumping investigations into European dairy and pork imports and lodged a complaint over the EU tariffs with the World Trade Organization.

The EV vote, which passed last week despite opposition from member states including Germany and Hungary, followed a months-long probe launched by European Commission president Ursula von der Leyen.

EU officials had concluded the tariffs were needed to protect the bloc’s manufacturers from competition from lower-priced, Chinese-made EVs, which they complained were unfairly subsidised by Beijing.

China’s retaliation on Tuesday marked a reversal from late August, when the commerce ministry handed a reprieve to brandy producers by deciding not to immediately impose new penalties, despite finding that they had dumped their products on the Chinese market.

French car executives and officials were among the crucial backers of the EV investigation, and France voted in favour of higher tariffs last week.

While Beijing and Brussels have signalled that talks over EV tariffs would continue, the result last week fuelled expectations of retaliation from China. Beijing has previously slammed the EU’s tariffs on EVs as protectionism, an abuse of international trade practices and undercutting the global fight against climate change.

Additional reporting by Wang Xueqiao in Shanghai and Arjun Neil Alim in Hong Kong