China Intensifies Pressure with EU Brandy Probe Hearing as EV Tariffs Commence – Reuters

By Joe Cash

BEIJING (Reuters) – China has announced the next phase of its anti-dumping investigation into European brandy imports, escalating tensions as the European Commission’s provisional tariffs on Chinese electric vehicles come into effect.

Ahead of the bloc’s confirmation of tariffs reaching as high as 37.6% on Chinese-made electric vehicles on Thursday, a spokesperson from China’s commerce ministry emphasized the need for continued negotiations with Brussels, while also hinting at possible retaliatory measures related to an ongoing investigation into EU pork imports.

On Friday, the ministry announced a hearing scheduled for July 18 to address claims that European brandy producers are selling their products in China at prices below market value. Major brands such as Martell, Remy Martin, and Hennessy have reportedly been summoned to the meeting in Beijing for the opportunity to present their defense personally.

The hearing was initiated at the request of cognac producers including Martell, Societe Jas Hennessy & Co., and Remy Martin, as noted in a ministry statement.

China has consistently urged the EU to withdraw its electric vehicle tariffs, expressing a willingness to engage in negotiations. Having already faced tariffs from the U.S., China has indicated it wants to avoid being drawn into another trade war, but has reaffirmed its commitment to protecting its domestic industries.

There is currently a four-month period where the EV tariffs remain provisional, allowing for extensive negotiations between the two parties.

The scheduled hearing on European brandy will take place just two days before the deadline set by Brussels for EV manufacturers to respond to the provisional tariffs.

In January, China initiated an anti-dumping investigation into European brandy imports, followed by a second inquiry in June regarding pork shipments from the EU, while Brussels is investigating claims that China’s electric vehicle manufacturers are receiving unfair subsidies.

Reports from China’s state-backed Global Times suggest that officials are contemplating an anti-subsidy investigation focused on European dairy imports and potential tariffs on high-engine petrol vehicles produced in Europe.

Analysts believe that by targeting brandy and pork imports, China aims to sway countries like France and Spain—strong advocates for EU tariffs—toward a stance similar to that of Germany, whose car manufacturers generated a substantial portion of sales in China last year. It is reported that China is prompting the Commission to reconsider the tariffs.

Italy, which has also signaled its support for the tariffs, dispatched its economic development minister, Adolfo Urso, to Beijing where he met with his Chinese counterpart, Jin Zhuanglong. Jin expressed China’s readiness to collaborate with Italy in sectors including automotive and shipbuilding.

In the wake of the Commission’s decision to implement the provisional tariffs, the Global Times published an editorial urging Brussels to heed the concerns of European car manufacturers opposed to the measures, while another article called for genuine dialogue to achieve a negotiated resolution.

The newspaper drew attention to the Tesla factory in Shanghai, broadening its appeal for protests against the tariffs.

China had hoped the EU would abandon its tariff plans ahead of July 4, but the Commission stated that China needed to present a clear strategy addressing the harmful subsidization of its electric vehicle sector.

China has accused the Commission of using its anti-dumping investigation to scrutinize the supply chains of Chinese companies, which, according to Beijing, provide a competitive advantage in the production of electric cars.

A report detailing the findings of the nine-month EV investigation by Brussels indicated that the Chinese government and state-owned automaker SAIC were reluctant to cooperate.

In a separate development, SAIC Motors stated it would formally request a hearing regarding the provisional tariffs, asserting that the investigation involved sensitive commercial information.

Shares of Chinese electric vehicle manufacturers, listed in Hong Kong, fell on Friday, with Geely Automobile leading the declines, dropping 4.1% to HK$8.34—the lowest share price since March 7.

Geely, the unlisted parent of Geely Automobile, is facing additional tariffs of 19.9% on top of the EU’s standard 10% duty on car imports.

Chinese brands MG and NIO indicated on Thursday that they might consider raising prices in Europe this year in response to the tariffs.