Trade Retaliation: China Probes EU Dairy in Response to EV Tariffs
On Wednesday, China’s Ministry of Commerce revealed a new anti-subsidy investigation into EU dairy products.
This inquiry directly responds to the EU’s recent decision to increase tariffs on Chinese electric vehicles (EVs), escalating ongoing trade disputes between the two powers.
The investigation covers a variety of dairy items, including fresh and processed cheese, as well as uncondensed milk and cream without added sugars.
Earlier in June, China had initiated a similar pattern of retaliation by probing EU pork imports, signaling a growing trend of reciprocal trade measures.
China’s move followed the EU’s announcement of provisional tariffs of up to 38% on Chinese-made EVs. The EU had determined that these vehicles benefited unfairly from state subsidies, giving them a competitive advantage in Europe.
The dairy investigation targets 20 specific subsidies that reportedly benefit various players in the EU dairy sector.
Some of these subsidies are part of the EU’s common agricultural policy, while others stem from individual member states such as Ireland, Austria, and Italy.
From January to July, China imported over US$315 million worth of these dairy products, highlighting the significant economic stakes.
Trade Tensions and Tariff Disputes
France led as the top exporter, with Italy following, having shipped products valued at US$115 million and US$43 million, respectively.
The investigation spans from April 2023 to March 2024, with the industry impact assessment dating back to 2020.
Planned to conclude within a year, the process may extend another six months under special circumstances. In response, Beijing labeled the EU’s increased EV tariffs as protectionist and politically motivated.
It was argued that these actions not only disregard international trade norms but also damage global climate change efforts and the EU’s green initiatives.
This exchange between China and the EU illustrates the complex interplay of international trade laws and geopolitical tensions.
As each side holds firm, the outcomes of these probes will likely influence their future trade relations. They could also reshape the strategies of other global players observing the situation.
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