China announced provisional duties that could reach 42.7% on dairy products imported from the European Union, a move that takes effect on Tuesday.
Trade Tensions Escalate
The decision comes as part of a broader tit-for-tat exchange between Beijing and Brussels. In August 2024, the EU opened a probe into Chinese subsidies for electric vehicles, prompting China to impose tariffs of up to 45.3% on EU-made EVs. China has also investigated EU brandy and pork imports, citing unfair subsidies and dumping allegations. These actions illustrate the mounting friction over trade practices between the two economic giants.
EU Dairy Tariff Details
The new duties will range from 21.9% to 42.7%, covering a basket of dairy items that includes fresh and processed cheese, blue cheese, milk, and cream with a fat content exceeding 10% by weight. The tariffs are provisional and are based on preliminary findings from an investigation opened by China’s Commerce Ministry in August 2024. The Ministry said the measures would apply to products that benefit from EU subsidies. The range reflects the varying levels of subsidy influence across different dairy categories.
China’s Justification and Investigation
China’s Commerce Ministry stated that preliminary findings showed EU subsidies had damaged China’s dairy industry. The ministry said the investigation looked at subsidies under the EU’s Common Agricultural Policy and subsidies offered to farmers in Italy, Ireland, and Finland. It also examined how these subsidies affected the competitiveness of Chinese dairy producers. The ministry announced the provisional duties on Monday, with implementation set for the following day.
European Commission Response
European Commission spokesperson Olof Gill said the investigation was based on questionable allegations and insufficient evidence. Gill told reporters that the commission is examining the reasoning behind the move and intends to provide comments to Chinese authorities. He added that the EU remains committed to good trade and investment ties with China. “In order for that to meaningfully happen, there is a list of issues and concerns that the European Union has had going back many months and even years that we would require China to address,” Gill said.
Other Chinese Countermeasures
Last week, Beijing announced up to 19.8% tariffs on EU pork imports, significantly lower than the preliminary tariffs of up to 62.4%. China accused the EU of dumping pork and pig by-products in the country, selling them at cheap prices that harmed its domestic pork industry. In July, Beijing also announced up to 34.9% tariffs on brandy imported from the EU, including cognac from France, although several major brandy brands had received exemptions. These measures mirror the EU’s earlier tariff on Chinese EVs.
Impact on Trade Balances
The EU runs a significant trade deficit with China, amounting to more than 300 billion euros ($352 billion) last year. China’s trade surplus with the EU has recently come into the spotlight, adding pressure to both sides. The new dairy tariffs add another layer to the already complex trade relationship. The provisional duties could affect the volume of dairy imports and the price of dairy products in both markets.
EU’s Stance and Future Dialogue
Gill said the EU remains committed to maintaining good trade and investment ties, but highlighted concerns about overcapacity, unfair use of trade instruments, and the trade deficit. He noted that the EU has had these issues for many months and even years, and that China must address them. The commission is reviewing the Chinese measures and will respond formally. Both sides have indicated that dialogue is essential to resolve the disputes.
Key Takeaways
- China’s provisional dairy tariffs range from 21.9% to 42.7%, based on EU subsidies.
- The tariffs apply to fresh and processed cheese, blue cheese, milk, and high-fat cream.
- The EU’s spokesperson criticized the investigation as lacking evidence and called for dialogue.
- China has also imposed tariffs on EU pork and brandy, reflecting broader trade tensions.
- The EU’s trade deficit with China exceeds 300 billion euros, a factor in the dispute.
China’s move underscores the escalating trade friction over subsidies and dumping allegations. The provisional duties will be monitored closely by both sides as they navigate the complex web of tariffs and trade negotiations. The outcome of these measures may shape the future of EU-China economic relations for months to come.
