Beijing/Paris — China imposed temporary antidumping measures on brandy imports from the EU on Tuesday, hitting brands from Hennessy to Remy Martin, after the 27-state bloc voted for tariffs on Chinese-made electric vehicles (EVs). #ChinaBrandyTariffs
An investigation has preliminarily determined that dumping of brandy from the EU is threatening China’s own brandy sector with “substantial damage”, the Chinese commerce ministry said.
Hinting at more to come potentially, the Chinese ministry said its antidumping and antisubsidy investigation into EU pork products was ongoing and would make “objective and fair” decisions at the end of the probe.
The ministry is considering a hike in tariffs on large-engine vehicle imports. Higher levies would significantly impact Germany’s producers. Last year, German exports of vehicles with engines of 2.5 liters or larger to China reached $1.2 billion.
Starting October 11, importers of EU-origin brandy must submit security deposits ranging from 34.8% to 39% of the import value. The ministry confirmed this requirement for all importers.
Beijing targeted France in its brandy probe because of its support for tariffs on China-made EVs. France accounted for 99% of China’s brandy imports last year. Additionally, French brandy shipments to China reached $1.7 billion.
Hennessy and Remy Martin were among the brands worst-hit, with importers having to pay security deposits of 39% and 38.1%, respectively.
The deposits would make it more costly upfront to import brandy from the EU. It was not immediately clear how and when importers would be able to get back their deposits. The Chinese commerce ministry gave no details.
Shares in Pernod Ricard were down 2.9% at 7.14am GMT after the news, while Remy Cointreau was down 5% and LVMH, owner of Hennessy, was down 4%.
Companies that cooperated in the Chinese investigation faced security deposit rates of 34.8%. Martell received the lowest rate at 30.6%. #ChinaBrandyTariffs
French cognac trade body the Bureau National Interprofessionnel du Cognac (BNIC), Pernod Ricard and Remy Cointreau did not immediately respond to a request for comment.
China’s Strategic Use of Brandy Tariffs to Pressure the EU
Moreover, the China brandy tariffs are seen as a strategic measure to pressure the EU. Brandy exports from Europe, especially France, play a significant role in trade. Therefore, this tariff is expected to impact European businesses heavily.
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