China Expands Probe into EU Imports Amid EV Tariff Tensions
China broadens investigation into EU products, including dairy and spirits, following proposed EU tariffs on Chinese EVs. France likely to be most affected, with potential for further probes into European car imports.
China has expanded its investigation into European Union products, intensifying trade tensions between the world's second-largest economy and one of its key trading partners. This move comes in response to the EU's proposed tariffs on Chinese electric vehicles (EVs).
On August 21, 2024, Beijing announced an anti-subsidy probe into cheese, milk, and cream imports from the EU. This investigation follows previously initiated anti-dumping checks on pork and brandy. The timing of this announcement is significant, occurring just one day after the EU published a revised tariff plan for China-made EVs.
The EU's proposed tariffs, which could reach up to 36.3%, are subject to a vote in October 2024. In July 2024, France, Italy, and Spain supported these tariffs, while Germany, Finland, and Sweden abstained from the decision.
France appears to be the most vulnerable to China's investigations. In 2023, French exports of the targeted dairy products to China amounted to $211 million, primarily consisting of milk and cream. Additionally, France supplied 99% of China's imported brandy last year and a portion of its pork imports.
Other EU countries also face potential impacts:
- Italy: $65 million in dairy exports
- Denmark: $55 million in dairy exports
- Netherlands: $52 million in dairy exports
- Spain: $49 million in dairy exports
It's worth noting that EU exports of milk powder to China, valued at $357 million in 2023, are not currently subject to investigation.
China's dairy market has been experiencing rapid growth, with a compound annual growth rate exceeding 6% in recent years. This growth has made China an increasingly important market for EU dairy exporters.
The ongoing trade tensions highlight the complex relationship between China and the EU. While China became the world's largest car exporter in 2023, surpassing Japan, the EU has been pushing for more balanced trade relations. The EU-China Comprehensive Agreement on Investment, concluded in principle in December 2020, aimed to address some of these concerns.
There are indications that China may consider further investigations, potentially targeting imported European large-engine gasoline cars. Such a probe would significantly impact Germany, whose exports of vehicles with engines of 2.5 liters or larger to China were valued at $1.2 billion in 2023.
As the world's largest automobile market and a key player in the global EV industry, China's actions in this trade dispute could have far-reaching consequences for the automotive sector and international trade relations.
"An anti-dumping investigation into imported European large-engine gasoline cars could be on the cards."
These developments underscore the ongoing challenges in maintaining balanced and fair trade practices between major economic powers. As both China and the EU implement measures to protect their respective industries, the global trade landscape continues to evolve, with potential ripple effects on various sectors and economies worldwide.
