China imposes more restrictions on Europe with its anti-dumping measures on imports of European brandy. This especially affects brands such as Hennessy and Rémy Martin.
The tariff war between the European Union (EU) and China has reached a new level: China has announced that it will apply ‘anti-dumping’ measures on brandy imported from Europe. This is a retaliatory measure, after the EU decided to increase tariffs on electric vehicles imported from China.
Although the measures are temporaryare expected to deal a blow to brandy brands such as Rémy Martin and Hennessy. Rémy Martin is owned by Rémy Cointreau; Hennessy is owned by Louis Vuitton Moët Hennessy (LVMH). The actions by Rémy Cointreau They plummeted by 8.11% on Tuesday morning, while those at LVMH fell 4.07%.
The Chinese Ministry of Commerce has stated that, following preliminary investigations, the Government has determined that the country’s domestic brandy sector is facing “threatened by substantial harmand that there is a causal relationship between dumping and the threat of substantial injury.”
The new tax will force Chinese companies importing brandy from the EU to constitute guarantee depositswhich can reach up to 39% of the total value of the import. This requirement is scheduled to come into force starting October 11. Currently, the security deposit rate for Rémy Martin is 38.1%, while Hennessy will have to pay a higher rate of 39%.
France is, predictably, the most affected country for this decision, as China imported up to 99% of its brandy from France in 2023. Other French products imported by China are cosmetics.
The main Chinese imports of Italy are pharmaceutical productsand copper is Spain’s main import. The main German imports to China are saloonsand the parts for the semiconductor manufacturing They are the most imported product from the Netherlands.
China hits back at the EU
China’s latest measure against European imports of brandy It comes after the EU recently revealed that its planned tariffs on Chinese electric vehicles being imported into the bloc could reach up to 45%. This has increased tensions between the EU and China, which have been increasing despite numerous attempts by Brussels and Beijing to reach a solution.
China has also hinted that might not be limited to brandybut could also impose tariffs on other products, such as imports of pork, dairy products and vehicles from the EU. If so, this could mean bad news for the German car manufacturers such as Mercedes-Benz, Audi and BMW especially, as they have several production facilities in China, which is also one of their key markets.
Russ Mold, chief investment officer at AJ Bell, said: “China continues to have tit-for-tat trade disputes centered on accusations of unfair competition and protectionism”.
“He has imposed ‘anti-dumping’ measures on brandy imported from the EU, which has caused shares of large beverage companies to fall. Rémy Cointreau, Pernod Ricard and Diageo have been affected by the news, which represents another stress point between the Asian country and the West,” he added.
“That could do raise the price of those products for drinkers, and potentially lead to a reduction in sales of brandy originating in the EU if the consumer looks for cheaper alternatives.
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