In a significant escalation of trade tensions, China has announced it will impose substantial provisional duties on dairy products imported from the European Union. The move is widely perceived as a direct countermeasure to the EU's recent tariffs on Chinese electric vehicles.
Details of the New Tariffs
The new duties, which come into effect from Tuesday, will range from 21.9% to 42.7%. While the maximum rate is high, most affected companies will face tariffs of just under 30%. The measures specifically target key dairy exports including unsweetened milk and cream, as well as fresh and processed cheeses. This list notably includes iconic French varieties such as Roquefort and Camembert.
China's Ministry of Commerce justified the action, stating its investigation found evidence that EU dairy imports were being subsidized and were causing harm to domestic Chinese producers. The value of the affected dairy imports was significant, with China importing approximately $589 million worth of these products in 2024, a figure consistent with the previous year.
EU Response and Escalating Trade War
The European Commission, which manages EU trade policy, has strongly rejected China's claims. It labeled the investigation as based on "questionable allegations and insufficient evidence" and called the new tariffs "unjustified and unwarranted." The Commission had already filed a formal complaint with the World Trade Organisation over a year ago, anticipating such measures.
This dairy tariff is the latest in a series of retaliatory steps from Beijing. The trade dispute began in 2023 when the EU launched an anti-subsidy probe into Chinese electric vehicles, culminating in the imposition of its own tariffs in October 2024. In apparent response, China has sequentially targeted imports of EU brandy, pork, and now dairy products.
Ongoing Negotiations and Future Outlook
Despite the tit-for-tat measures, diplomatic channels remain open. China's commerce ministry confirmed that negotiations regarding the EU's electric vehicle tariffs resumed this month. However, a senior European diplomat based in Beijing indicated last week that major issues still divide the two economic giants.
The European Commission has stated it continues to engage with Chinese officials on a potential resolution. One discussed option involves replacing the current EV tariffs with minimum price commitments from Chinese manufacturers. The EU insists that any such price undertakings must effectively eliminate the harm caused by unfair subsidies and be practically enforceable.
The situation remains fluid, with both sides holding firm to their positions while exploring avenues for de-escalation. The outcome of these talks will have significant implications for global trade dynamics and the economic relationship between the EU and China.
