In a significant escalation of ongoing trade tensions, China announced on Monday the imposition of provisional anti-subsidy duties on dairy products imported from the European Union. The move follows a more than year-long investigation by Chinese authorities, who concluded that subsidised EU dairy imports have caused harm to China's domestic dairy sector.
Details of the New Tariff Structure
The Chinese Ministry of Commerce stated that the new duties, which will take effect from December 23, will range between 21.9% and 42.7%. The specific rates vary significantly for different companies based on the findings of the probe. According to the ministry's preliminary findings, dairy products originating in the EU benefited from subsidies that led to significant damage for local Chinese producers.
The highest duty rate of 42.7% will apply to major European dairy cooperatives, specifically FrieslandCampina Belgium NV and FrieslandCampina Nederland BV. Conversely, Italy's Sterilgarda Alimenti SpA will be subject to the lowest rate of 21.9%. The ministry further detailed that approximately 12 French companies will face duties of 29.7%, while around 50 other firms from Italy, France, and Germany will be subject to a rate of 28.6%. Notably, any EU firm that did not participate in China's investigation will automatically face the top levy of 42.7%.
Background: A Tit-for-Tat Trade Dispute
This decision does not occur in a vacuum. It marks the latest chapter in a series of retaliatory trade measures between the two economic giants. The friction notably intensified in 2023 when the European Commission launched an anti-subsidy investigation into electric vehicles manufactured in China. In what was widely perceived as a direct response, Beijing subsequently initiated its own probes into EU imports, including brandy, pork, and the now-targeted dairy products.
The stakes are high for European exporters. China represents a colossal market for EU dairy. Reuters, citing customs data, notes that the European Union is China's second-largest supplier of dairy products, trailing only New Zealand. EU figures from 2023 highlight China's importance: it was the second-largest destination for EU skimmed milk powder exports and the fourth-largest market for both butter and whole milk powder.
Official Stance and Future Implications
In response to concerns over the use of such trade remedies, an official from the commerce ministry's trade remedy department sought to project a measured stance. The official emphasised that China has exercised restraint, noting that no new trade remedy investigations targeting the EU have been launched this year. Final rulings were issued in only three anti-dumping cases involving brandy, copolymerised polyformaldehyde, and pork.
"China's position against the abuse of trade remedy measures remains unchanged, and we are willing to work with the EU through dialogue and consultation to properly handle trade frictions and jointly safeguard the overall China-EU economic and trade cooperation," the official told Reuters. This statement underscores a desire to de-escalate even as new tariffs are implemented, leaving the door open for negotiations while firmly protecting domestic interests.
The imposition of these duties is set to increase costs for European dairy giants and could reshape trade flows in one of the world's most critical agricultural markets. It signals Beijing's readiness to leverage its import market as a tool in broader geopolitical and trade negotiations, ensuring that European scrutiny of Chinese industries does not go unanswered.
