The trade war between China and Europe is gaining momentum. Beijing imposes tariff on brandy, but “it's about cars”

The staff of one of the bars in the center of Shanghai is already informing customers that it will soon stop serving some alcohols from Europe. They will simply become too expensive. China has introduced tariffs on brandy, including cognac, imported from the European Union. This is a counterstrike as part of the “cold trade war”. A kind of revenge for the prohibitive tariffs that Europe imposed on Chinese electric cars.

– It's not really about brandy or cognac. It's about electric cars. This situation clearly affects Europeans. They should think about other measures, not tariffs, comments one of the residents of Shanghai.

Beijing called its move the introduction of “temporary anti-dumping measures”, which would suggest that European alcohol producers are selling their products below production costs.

Europe makes the same accusation against suspiciously cheap Chinese electric cars. Last week, the European Commission announced that it had voted to impose additional duties on them. China's riposte will mainly affect alcohol producers in France.

– We feel that we have been consciously sacrificed. We have had the opportunity several times to explain what impact tariffs will have on our sector. Those who made such decisions should admit to them. We will not accept suffering in silence, says Anthony Brun, head of the French Association of Cognac Producers.

There has been speculation for a long time that China will want to hit France with tariffs. Because President Emmanuel Macron is the biggest supporter in Europe of imposing tariffs on Chinese vehicles. In this way, he wants to protect the French automotive industry.

Germany, which has the most to lose in a trade war with China, is against this approach.

– The European, and especially German, automotive industry relies on exports. 70 percent of our jobs depend on it. Current decisions may lead to a spiral of protectionism, as a result of which tariffs will result in further tariffs – warns Hildegard Mueller, president of the German Automotive Industry Association.

– Germans sell a lot of cars in China, mainly premium brands, this is their strength. There are brands that sell more cars in the Chinese market than in the European market. They really don't want China to impose tariffs in response to these EU tariffs, they are very afraid of it, because the sales of German brands in China are already decreasing – says Szymon Kazimierczak, journalist of TVN24 BiS and TVN Turbo.

To fuel these fears, Beijing announced that it was considering increasing customs duties on the import of vehicles with large engine capacities, which is a German specialty on the Chinese market.

Luxury goods and Polish specialties – agricultural products such as milk or pork – are also at risk of retaliatory tariffs. China claims that it may treat EU subsidies for their production as unfair competition.

READ ALSO: Alcoholic revenge. The Chinese respond to tariffs on electric cars

– In my opinion, the crux of the matter is that China wants to tell Europe: we are ready to retaliate, but we are also ready to talk – says Albert Hu from the China Europe International Business School in Shanghai.

Chinese electric car manufacturers argue that European customers will lose the most in the growing cold trade war.

– It's bizarre that politicians are asking everyone to change and switch to electric vehicles. And at the same time, they impose such high tariffs on these vehicles, which will make them much more expensive in the near future, says Clement Lefevre, spokesman for “MG Motor France”.

A ban on introducing new combustion cars to the market is to come into force in the entire European Union from 2035. In a decade, Europeans are expected to drive mainly electric cars, but lifting or easing the ban is an increasingly common political demand, mainly from the European far right.