European milk and cheese producers are now facing scrutiny in the ongoing trade tensions between China and the European Union. The Chinese Commerce Ministry announced on Wednesday that it would initiate an investigation into subsidies provided by the EU and certain member countries for dairy products, potentially resulting in tariffs on exports to China.
This move follows the EU's recent decision to impose tariffs on electric vehicles manufactured in China, a decision that has been met with criticism from the Chinese government and automakers. The dairy investigation will encompass various products such as fresh and processed cheese, blue cheese, and milk and cream with a fat content exceeding 10%, targeting subsidies under the EU's Common Agricultural Policy and those offered by eight EU countries including Italy, Finland, and Croatia.
China's actions come in response to previous investigations into European brandy and pork exports, which were initiated during the EU's probe into Chinese subsidies for electric vehicles. These tit-for-tat investigations have raised concerns about the potential escalation of a broader trade conflict.
The European Union Chamber of Commerce in China expressed disappointment over the increasing use of trade defense measures by governments, noting a concerning trend of retaliatory actions. China has also lodged a complaint with the World Trade Organization regarding the EU's provisional tariffs on Chinese-made EVs, while the EU Commission maintains that its investigation and tariffs comply with WTO regulations.
The draft decision on finalizing tariffs for Chinese EVs made slight adjustments to the provisional rates, with BYD facing a 17% tariff and SAIC Motor subject to a 36.3% tariff. Tesla, which requested a review of specific subsidies it received, was assigned a 9% tariff for the time being. The final approval of these tariffs rests with the EU member states, with a decision expected by early November, four months after the provisional tariffs took effect on July 5.
