(qlmbusinessnews.com Wed. 9th Oct, 2024) London, UK —
French Brandy Industry Faces Crisis as China Enforces New Tariffs
China has announced new taxes on European brandy imports, which France views as retaliation for the European Union’s recent decision to impose significant tariffs on Chinese-made electric vehicles. The European Commission has condemned China's move, labelling it an “abuse” of trade defence mechanisms and vowing to challenge the tax at the World Trade Organization (WTO).
China, however, defended the tax as an “anti-dumping” measure, claiming it was necessary to protect its domestic producers from being undercut by European imports. The duties will affect major French brands, such as Hennessy and Remy Martin, with French brandy producers warning that the move could be “catastrophic” for the industry.
The announcement came just days after the EU approved heavy tariffs on Chinese electric cars, which Beijing says are a breach of international trade rules. In response, China’s commerce ministry argued that European brandy imports could cause “substantial damage” to local producers, leading to the imposition of “security deposits” on these imports.
The brandy industry in France, which accounts for 99% of all brandy exported to China, has been severely impacted. Shares in French luxury companies, including LVMH, which produces Hennessy, dropped by over 3%, while Remy Cointreau, makers of Remy Martin, saw an 8% decline. Analysts predict the tariffs could result in a 20% price increase for consumers, potentially leading to a sharp drop in sales and volumes.
In addition to brandy, China is reportedly considering extending tariffs to other EU imports, including cars, pork, and dairy. French Trade Minister Sophie Primas called the brandy tax “retaliatory” and “unacceptable,” stating that it contradicts international trade rules. France has pledged to work closely with the EU to address the issue at the WTO.
German carmakers, including Volkswagen, Porsche, Mercedes-Benz, and BMW, also saw their shares fall, as fears grew that China’s tariff retaliation could soon extend to the automotive sector.
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