A Chinese commerce ministry statement echoed the EU’s justification as it claimed that preliminary findings of an investigation had determined that dumping of brandy from the European Union threatens “substantial damage” to its own sector.
Following the announcement, shares in French brandy companies fell.
French cognac producers group BNIC said in an email : “This announcement clearly shows that China is determined to tax us in response to European decisions on Chinese electric vehicles.”
French Trade Minister Sophie Primas labelled the retaliation as “unacceptable” and in contravention of “world trade rules” whilst promising that the issue would be taken up with the World Trade Organisation (WTO).
France is the country of origin for 99 percent of brandy imported into China with French brandy shipments to China generating $1.7 billion last year.
It is believed that China is considering further tariffs on goods such as cars, pork, and dairy.
A retaliatory tax on the car industry could hit Germany hard, despite their opposition to the introduction of tariffs on China.
In advance of the decision, German car manufacturer Volkswagen warned that the EU was taking “the wrong approach” and urged further talks with Beijing to avoid an escalating trade dispute.
Speaking in Berlin last week, French President Emmanuel Macron said: “We have to protect the level playing field in all the different sectors of our industry,” whilst calling a Chinese brandy tax “pure retaliation”.
The European Commission has promised to work with China to find a mutually-beneficial solution to the issue, meaning that there is still scope for the tariffs to not ultimately be imposed.
