China is retaliating for imposing additional tariffs on its electric cars. The Middle Kingdom announced the introduction of temporary “anti-dumping measures” on brandy imported from the European Union. This will affect brands such as Hennessy and Remy Martin. China's Ministry of Commerce said its investigation had initially shown that EU goods pose a threat to the local brandy sector.
Last week European Commission announced that it had voted to impose an additional duty on electric cars imported from China. Tariffs are expected to range from 7.8 to 35.3 percent depending on the manufacturer. They are in addition to the EU's standard car import duty of 10 percent. China has already expressed its firm opposition.
More information can be found in: Customs duties on Chinese electric cars. Most EU countries give the green light
Not only brandy, but also some cars
According to Reuters, on Tuesday, October 8, China announced that it was imposing temporary anti-dumping measures on brandy imports from the European Union, targeting brands from Hennessy to Remy Martin. China's Commerce Ministry said an investigation had preliminary found that dumping (selling at low prices) of brandy from the EU was threatening China's brandy sector with “significant damage.”
Indicating potential further action, the Chinese ministry said an anti-dumping investigation into EU pork products is ongoing and will make “objective and fair” decisions once the investigation is complete.
The Chinese ministry added that it was considering increasing customs duties on the import of vehicles with large engine capacities. The higher fees will hit German manufacturers hardest, as German exports of vehicles with engines with a capacity of 2.5 liters and above to China reached $1.2 billion last year.
The ministry announced that from October 11, importers of brandy from the EU will have to pay security deposits, mainly in the amount of 34.8 to 39.0 percent. import values.
France will “get hit” the hardest
As Reuters points out this France is seen as a target of Beijing's investigation into Brandy due to its support for tariffs on Chinese-made electric vehicles. This country was also responsible for 99 percent. brandy imports to China last year, and French brandy shipments reached $1.7 billion.
The Hennessy and Remy Martin brands were among the most affected brands, and importers will have to pay deposits of 39.0 and 38.1 percent, respectively.
The deposits would make importing brandy from the EU more expensive upfront. It is unclear how and when importers will be able to get their deposits back. The Chinese Ministry of Commerce did not provide any details.
Following the news, Pernod Ricard shares fell 2.9%, Remy Cointreau shares fell 5% and LVMH, the owner of Hennessy, fell 4%.
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