China and Europe are currently in a trade battle between Chinese-imported electric vehicles and French-imported Cognac. China just recently announced a hearing would take place regarding European brandy imports, as in January, China investigated brandy being sold at lower prices. The hearing will take place on June 18th and will focus on the reasoning behind the low prices and the damage they have caused to the Chinese liquor industry, as reported by CNN Business. This announcement of the hearing took place on the same day as the European Commission’s additional professional tariffs on imports of Chinese-made electric vehicles, tariffs ranging from 17.4% to 37.6%. These duelling investigations have increased tensions in trade between the two commissioners.
One of the main French actors in this conflict is the finance chief at Hennessy Cognac L.V.M.H. brands, Jean-Jacques Guoiny, who had much to say about the tariffs. According to Reuters, he stated that “China’s anti-dumping probe into Europe’s cognac industry is a tit-for-tat reaction to European Union tariffs on Chinese electric vehicles”, claiming that this battle on French imported cognac is just retaliation for the electric cars. He claims that the price of cognac is always negotiated when there is a trade conflict, and they constantly have to defend themselves by explaining why the price of cognac is correct. CNN Business also reported that he stated “You can be a regional player with a very particular role in globalization, as in our case, and regardless, find yourself hostage to several conflicts that have nothing to do with your activities”. Also, according to CNN, 99% of China’s imported brandy comes from France, and its value reached $1.74 billion, meaning French cognac producers will suffer if the investigation imposes any more tariffs.
Both sides are discussing raising tariffs on Chinese-imported electric vehicles and French cognac. The tariffs will become definitive in November if an agreement is not reached. Beijing has already claimed that it will take all measures necessary to protect Chinese interests, claiming that they would “hit European agricultural goods, aviation, and cars with large engines.” Guoiny equates this trade war on cognac and electric vehicles with China’s belief that the European region is weaker than the United States currently and that this can damage the region economically and politically, as the French side will also take measures to protect Europe. With both sides staying secure in their interests, it looks as if the tariffs will remain until November.
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