China’s Trade Chess Move: Brandy Tariffs Suspended Amid EU EV Disputes

Beijing announced it will not impose provisional tariffs on brandy imported from the EU despite findings of low market prices. This decision may be strategic, as China hopes to influence EU's stance on tariffs for Chinese electric vehicles. The EU considers the investigation questionable but is monitoring the situation closely.

Beijing announced on Thursday that it will not impose provisional tariffs on brandy imported from the European Union, despite finding it had been sold below market prices. This decision offers both sides some respite amid tense trade discussions. According to China’s commerce ministry, European distillers had been selling brandy at a margin of 30.6% to 39%, damaging the domestic industry.

"Provisional anti-dumping measures will not be taken in this case for the time being," stated the ministry, though it kept future action on the table. The ministry had earlier expected to conclude the probe by January 5, 2025, with extensions possible under special circumstances.

China is engaging the EU's 27 member states to oppose the European Commission's proposal to levy up to 36.3% additional duties on Chinese-made electric vehicles. The decision on brandy could help in these negotiations. Barclays analyst Laurence Whyatt remarked that this could be a tactical move by China. The European Commission acknowledged Beijing's announcement, questioning the investigation's merits and pledging to monitor compliance with WTO rules. France, heavily involved in China’s brandy imports and supportive of EV tariffs, was particularly impacted and urged for negotiation to prevent potential duties that could severely affect the Cognac sector.