China Unveils Next Steps in EU Brandy Probe as EV Tariffs Take Effect

China Daily via REUTERS/File Photo
A drone view shows BYD electric vehicles (EV) before being loaded onto the “BYD Explorer No.1” roll-on, roll-off vehicle carrier for export to Brazil, at the port of Lianyungang in Jiangsu province, China April 25, 2024.

BEIJING, July 5 (Reuters) – China announced the next step in its anti-dumping investigation into European brandy imports on Friday, ramping up tensions on the same day the European Commission’s provisional tariffs on Chinese-made electric vehicles take effect.

While a Commerce Ministry spokesperson stressed at a news conference on Thursday that Brussels and Beijing should stay at the negotiating table ahead of the bloc confirming tariffs of up to 37.6% on Chinese-made EVs, the prospect of retaliation was kept alive by a reference to another probe into EU pork imports.

The Commerce Ministry said on Friday it would hold a hearing on July 18 to discuss an ongoing investigation into claims that European brandy producers are selling into China at below market rates.

China has repeatedly called on the EU to cancel its EV tariffs, expressing a willingness to negotiate. It has said it does not want to be embroiled in another tariff war – with U.S. tariffs on its goods continuing to sting – but that it would take all steps to protect Chinese firms.

There is a four-month window during which the EV tariffs are provisional and intensive talks are expected to continue between the two sides as Beijing threatens wide-ranging retaliation.

Since January, Beijing has opened tit-for-tat investigations into European brandy and pork imports, striking at predominantly French, Spanish, Dutch and Danish commercial interests as the 27-strong bloc wavers over whether to back the Commission in an upcoming advisory vote on the EV tariffs.

The state-backed Global Times newspaper has also reported that officials are considering opening an anti-subsidy probe into European dairy imports and imposing tariffs on large-engined petrol cars manufactured in Europe.

Authorities have previously dropped hints about what they might do next through state media commentaries and interviews with industry figures.

Analysts say China chose brandy and pork to persuade France and Spain, who have been among the firmest backers of EU curbs, to join the likes of Germany, whose automakers made a third of their sales last year in China and reportedly wants to lobby the Commission to stop the tariffs.

After the bloc confirmed the provisional tariffs would take effect from Friday, the Global Times published an article calling on the EU to “show sincerity” in negotiations over the EV curbs and a separate editorial urging Brussels to consider European automakers’ opposition to the curbs.

The Global Times also called attention to American EV maker Tesla’s TSLA.O manufacturing plant in Shanghai, broadening its call to protest against the tariffs.

Chinese EV makers’ Hong Kong-listed shares fell on Friday, led by Geely Automobile 0175.HK, which dropped 4.1% to HK$8.34, its lowest since March 7.

SAIC Motors will officially request the European Commission to hold a hearing on its provisional tariffs on the Chinese electric vehicle maker, the company said in a statement on Friday.

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

Chinese brands MG and NIO suggested on Thursday they might raise prices in Europe later this year, in response to the curbs.