China decided to spare most cognac producers in the European Union from the vexing 34.9% tariff that will enter into effect for the next five years, in yet another sign of the easing of tensions between Brussels and Beijing.
Last year, China announced a probe into alleged anti-dumping practices by EU spirit producers, a move largely seen as retaliation for the EU’s tariffs on Chinese electric vehicles (EVs). In October 2024, brandymakers had to pay deposits to the Chinese government when provision duties were imposed. According to the Chinese Commerce Ministry, the deposit will be returned to producers.
The ministry confirmed the 34.9% new tariff duty; however, it will exempt major French producers, such as LVMH-owned Hennessy, Pernod Ricard, and Remy Cointreau. Those producers will have to keep exports to China at a minimum price to avoid tariffs. At the moment it is unclear what those minimum prices will be. Reuters reported last week that French cognac makers have been in negotiations with China to set up a minimum sale price for their spirit in the Asian country.
However, the news was welcomed by the producers. Remy Cointreau’s parent company, Remy Martin, released a statement saying that compared to tariffs, the minimum price requirement is “a substantially less punitive alternative.” Competitor Pernod Ricard also approved the new decision, as it will be less than what cognac producers would have to pay under the new tariffs.
According to Reuters, the issue has been “repeatedly” brought up by the French government with the Chinese government. The final decision came as Chinese Foreign Minister Wang Yi was visiting Europe, on the same day he visited Paris. He is working on the future meeting between the EU and China, set for the end of July, the first in many years. This meeting, in the hope of both sides, could mark a turning point in the trade relationship between the EU and China, after years of rocky relations and trade disputes.
