According to the latest China news, On October 11, 2024, China imposed provisional anti-dumping tariffs ranging from 30.6% to 39% on European brandy. The tariffs target European producers of premium brandy including French brands like Hennessy, Rémy Martin and Martell and are expected to increase the cost of these products for Chinese consumers.
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According to the latest China news, key brands affected include Hennessy, Remy Martin and Martell, which are French cognac producers. These brands face financial repercussions due to the anti-dumping tariffs imposed by China.
Importers of Hennessy will be hit with a 39.0% security deposit, while those dealing with Remy Martin face a 38.1% levy. Martell, which cooperated with China’s investigation will see the lowest deposit rate at 30.6%.
France is the largest exporter of brandy to China and it is particularly hard-hit by these measures. In fact, French brandy shipments accounted for 99% of China’s brandy imports, generating around $1.7 billion in revenue in 2023.
The anti-dumping tariffs imposed by China are expected to disrupt this trade, with consequences for French brandy producers and exporters.
The French cognac industry is reeling from this development with the Bureau National Interprofessionnel du Cognac calling the move catastrophic for the sector.
BNIC expressed concerns that these tariffs are politically motivated and unrelated to the actual brandy trade. French officials have labeled China’s tariffs as pure retaliation for the EU’s decision to impose levies on Chinese-made EVs.
Pernod Ricard, the owner of Martell saw its shares fall by 4.2%. Remy Cointreau, the producer of Remy Martin experienced a steep decline of 8.7%. LVMH, which owns Hennessy saw its shares fall by 4.9%.
France and the EU have been quick to condemn China’s anti-dumping tariffs on European brandy, characterizing them as retaliatory and in violation of international trade rules.
According to the latest China news, France’s trade ministry described the measures as incomprehensible and said they represented a breach of free trade principles.
The French government has vowed to work with the European Commission to challenge the tariffs at the World Trade Organization.
French officials including President Emmanuel Macron have accused China of using the brandy probe as a form of retaliation for the EU’s EV tariffs.
Macron has called for urgent action to protect French exporters particularly in the brandy sector from the effects of these tariffs.
The European Commission has pledged to defend its industries, stating that it would challenge China’s tariffs at the WTO as an “abuse of trade defense instruments”.
In addition to the anti-dumping tariffs on European brandy, China has indicated that it is considering imposing additional tariffs on other European imports including cars, pork and dairy.
According to the latest China news, This could deal a further blow to European industries particularly German carmakers, who export a huge number of vehicles to China.
German carmakers including Volkswagen, Porsche, Mercedes-Benz and BMW, are bracing for the impact of Chinese tariffs on large-engine vehicles.
These exports are valued at $1.2 billion last year.
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This decision is set to have an impact on European brandy brands particularly French producers, as France accounts for 99% of the brandy imported into China.
With the imposition of anti-dumping tariffs, prices of imported brandy are expected to soar, reducing the competitive advantage European producers previously enjoyed.
The deposit rates for various producers are as follows:
- Martell: 30.9%
- Hennessy: 39.0%
- Rémy Martin: 38.1%
The total cost of importing brandy into China will include a 13% value-added tax (VAT) and a 20% consumption tax, plus RMB 0.912 per liter. These additional charges will increase the retail price of European brandy.
According to the latest China news, the European Commission has expressed strong opposition to China’s move, condemning it as a violation of WTO rules.
In response, the Commission stated that it would robustly challenge these measures at the WTO level and explore all available tools to support EU producers facing market disturbances.
European producers are already struggling with economic challenges in the face of growing competition from Chinese industries and these anti-dumping tariffs on brandy only add to the pressure.
China’s decision to impose anti-dumping tariffs on European brandy is seen as a direct response to the EU’s vote to impose tariffs on Chinese electric vehicles.
The EU had previously announced its intention to impose tariffs as high as 45% on Chinese EVs, citing concerns that they were being sold at artificially low prices due to state subsidies.
China has protested the EU’s tariffs on its EVs, accusing the bloc of violating WTO rules. The introduction of anti-dumping tariffs on brandy can thus be viewed within the context of the trade war between the two regions with both sides using trade defense measures to protect their respective industries.
China has a history of using trade defense measures such as anti-dumping tariffs, to protect its domestic industries. In 2020, China imposed similar tariffs on Australian wine, following a dispute over trade practices.
These measures are often used as a tool in response to perceived unfair competition from foreign producers. In this case, China has adopted a similar approach with European brandy.
The provisional anti-dumping tariffs imposed on European brandy apply only to brandy in containers of less than 200 liters, exempting bulk shipments.
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