China has announced provisional tariffs on selected dairy products imported from the European Union (EU), with rates reaching as high as 42.7%. This decision follows the conclusion of an anti-subsidy investigation widely interpreted as a response to the EU’s tariffs on Chinese electric vehicles. The new duties, which will range from 21.9% to 42.7%, are set to take effect on October 10, 2023.
The tariffs specifically target various dairy products, including notable items such as French blue cheese, Roquefort. Most companies involved in the trade are expected to face an average tariff of around 30%. The European Commission, which oversees trade policies within the bloc, has not yet commented on this development.
While the tariffs are classified as provisional and subject to revision in a final ruling, this move marks a significant escalation in the ongoing trade tensions between China and the EU. Tensions began to intensify in 2023 when the European Commission initiated an anti-subsidy investigation into Chinese electric vehicles. In retaliation, China has previously imposed tariffs on EU products such as brandy and pork.
Impact on Trade and Local Producers
China’s Ministry of Commerce announced that it found evidence of EU dairy imports being subsidized in a manner detrimental to Chinese producers. In 2024, China imported approximately $589 million worth of dairy products implicated in the current investigation, consistent with the previous year’s figures.
Around 60 firms, including major player Arla Foods, will bear tariffs between 28.6% and 29.7%. Italian company Sterilgarda Alimenti SpA will incur the lowest tariff of 21.9%, while FrieslandCampina Belgium N.V. and FrieslandCampina Nederland B.V. face the highest at 42.7%. Notably, companies that did not engage in the investigation will face the highest tariff rates.
This decision is likely to be welcomed by Chinese dairy producers, who are currently dealing with an oversupply of milk and declining prices. Factors such as low birth rates and shifting consumer preferences have negatively impacted demand. In response to these challenges, China, the world’s third-largest milk producer, has advised its dairy farmers to reduce production and cull less productive cows.
Ongoing Negotiations and Future Prospects
Negotiations regarding the EU’s electric vehicle tariffs have resumed as of this month, although no announcements have followed the initial discussions. A senior European diplomat in Beijing indicated that significant issues remain unresolved between the two parties.
In the previous week, China had notably reduced provisional tariffs on pork, which may signal a willingness to adjust trade measures amid ongoing negotiations. The current situation illustrates the complexities of international trade relations and highlights the potential for further developments as both sides seek to navigate these turbulent waters.
As these tariffs come into effect, stakeholders from both the EU and China will be closely monitoring the evolving trade landscape to assess the implications for their respective markets.
