China hits back at EU with brandy tax

Shares in brandy companies dropped after the announcement.

China announced new restrictions on European brandy just days after EU countries approved steep tariffs on Chinese-made electric vehicles.

China’s commerce ministry said brandy imports threaten “substantial damage” to its own producers. Importers will have to pay “security deposits” on European brandy.

It also said it was considering a hike in tariffs on imports of large-engine vehicles, which would hit German producers hardest, and pork and dairy products.

French Trade Minister Sophie Primas said the brandy tax “seems to be a retaliatory measure” after the European Union decision to raise tariffs on Chinese electric cars.

She said that kind of retaliation would be “unacceptable”, and a “total contradiction” of international trade rules, adding that France would work with the European Union to take action at the WTO.

France accounts for 99% of brandy exported to China, and French cognac lobby group BNIC said the move would be “catastrophic” for the industry.

“The French authorities cannot abandon us and leave us alone to deal with Chinese retaliation that has nothing to do with us,” BNIC said, adding that the taxes “must be suspended before it’s too late”.