China discloses next step in EU brandy probe as EV tariffs take effect

China has escalated tensions with the European Union by announcing the next phase in its anti-dumping investigation into European brandy imports. This move comes on the same day that the EU’s provisional tariffs on Chinese-made electric vehicles (EVs) take effect.

The Chinese Commerce Ministry has scheduled a hearing for July 18 to discuss claims that European brandy producers are selling their products in China at below-market rates. This hearing was requested by major brandy houses including Martell, Hennessy, and Remy Martin.

While China has urged the EU to cancel its EV tariffs and expressed willingness to negotiate, it has also warned that it will take necessary steps to protect its companies. The EU’s provisional tariffs of up to 37.6 per cent on Chinese-made EVs are now in effect, with a four-month window for intensive talks between the two sides.

In response to the EU’s actions, China has launched investigations into European brandy and pork imports. There are also reports of potential probes into European dairy imports and possible tariffs on large-engined petrol cars from Europe.

Analysts suggest that China’s focus on brandy and pork is an attempt to persuade France and Spain, strong supporters of the EU tariffs, to reconsider their position. Meanwhile, Germany, whose automakers have significant sales in China, is reportedly lobbying against the tariffs.

The situation has led to a decline in the stock prices of Chinese EV makers, with some companies considering price increases in Europe. As tensions escalate, both sides continue to call for negotiations while preparing for potential further trade actions.

As the situation continues to evolve, both sides are maintaining a delicate balance between asserting their trade interests and keeping the door open for negotiations. The outcome of these tensions could have significant implications not only for the EV and spirits industries but also for broader EU-China trade relations and global trade patterns.

The involvement of other countries and companies, such as American EV maker Tesla with its manufacturing plant in Shanghai, adds another layer of complexity to the situation, potentially influencing how different stakeholders approach the ongoing dispute.