China has imposed tariffs on EU brandy imports in an escalating tit-for-tat trade row with Brussels over extra levies on Chinese-made electric vehicles.
Beijing also said it was considering duties on imported petrol cars from Europe.
China said importers of EU brandy would have to pay a levy of as much as 39% from Friday 11 October, a week after EU member states voted in favour of taxing Chinese EVs.
Less than two months ago Beijing said it would not impose provisional tariffs on brandy even though it said it had found evidence of dumping.
Shares of European car and brandy manufacturers fell after China’s announcement, with BMW down 3% before recovering and the French distiller Rémy Cointreau down more than 9% and the Hennessy Cognac owner LVMH down 6.8%. Pernod Ricard dropped 4.6%.
The announcement comes just months after Emmanuel Macron tried to woo the Chinese president on an official visit to France.
He presented Xi Jinping with a bottle of exclusive Louis XIII Cognac, a nod to Beijing’s opening of an anti-dumping investigation into the brandy, and praised his counterpart for his “open attitude” towards the inquiry.
But the European Commission president, Ursula von der Leyen, restated the wider EU’s determination to allow China to continue to sell into the EU but not using state subsidies and other support to undercut local manufacturing.
Permanent EU tariffs are not due to come into force until November and both sides continue to talk.
However, EU insiders fear Xi is loth to climb down having predicated growth in the Chinese economy on exports of green technology ranging from cars to solar panels, heat pumps and wind turbines.
The latest row also takes place against the backdrop of a potential Donald Trump presidency in the US.
On Tuesday, China urged the US to lift sanctions, some of which started in 2018 during Trump’s presidency, on its companies “as soon as possible”.
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China’s commerce minister, Wang Wentao, said he had raised “serious concerns” with his US counterpart, Gina Raimondo, over Washington’s curbs on its trade.
The EU said it would challenge the Chinese measures on brandy at the World Trade Organization.
“We believe that these measures are unfounded, and we are determined to defend EU industry against abuse of trade defence instruments,” said the European Commission.
Chinese policymakers are under pressure on the domestic front as they strive to reach their growth targets for 2024. Beijing last month announced interest rate cuts and pledged as much as $340bn (£260bn) to support the stock market, but held back from unleashing more stimulus on Tuesday.
