China to Penalize European Brandy Imports, Striking Back at Car Tariffs

Raising the stakes in a trade dispute with the European Union, the Chinese government said on Tuesday it would impose temporary penalties on brandy from Europe and was mulling broader tariffs on European goods.

China’s Ministry of Commerce issued the brandy measures after member countries of the European Union voted last Friday to proceed with anti-subsidy tariffs on electric cars from China. The ministry said that brandy importers would temporarily be required to post deposits of up to 39 percent on the wholesale value of shipments to China.

The deposits would then be forfeited and become tariffs if China eventually makes the measures permanent. The ministry accused European brandy producers of hurting Chinese producers by dumping brandy at unfairly low prices in the Chinese market.

The action produced an immediate slump in the stocks of big European brandy makers like LVMH, the corporate parent of Moët Hennessy, whose shares fell nearly 4 percent.

European officials have dismissed the dumping accusation as unfounded, pointing out that brandy is often much more expensive in China than in Europe. Spirits Europe, a European trade association, strongly criticized the Chinese action on Tuesday as a “significant additional financial burden,” while calling for negotiations between Brussels and Beijing.

The Ministry of Commerce also said that it was mulling whether to impose tariffs on European pork and dairy products, as well as gasoline-powered cars with large engines. Such taxes could hurt big pork exporters like Spain and the Netherlands as well as Ireland, a leading dairy exporter. The car tariffs could hit Germany, which was outvoted last Friday when it opposed the European Union’s electric car tariffs.

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