Shares in international drinks companies fell this morning after China slapped an anti-dumping tariff on brandy imports from the EU, escalating trade tensions.
The move from China came only days after the EU imposed a tariff of 45 per cent on Chinese electric vehicles for the next five years.
The European Commission called it an “abuse” of trade defence measures and said it would challenge China’s tax at the World Trade Organization (WTO).
Shares in Rémy Cointreau fell nearly eight per cent this morning, while shares in Pernod Ricard were down 3.7 per cent.
Anti-dumping is an import duty charged in addition to normal customs duty and can be levied when a foreign company sells an item significantly below their normal price.
China’s commerce industry imposed the tariff after a preliminary investigation determined that brandy imports from the EU threatened “substantial damage” to its own producers.
AJ Bell analyst Russ Mould explained that importers of brandy coming to China from the EU will now have to deposit security deposits of up to 39 per cent of the import value.
The “tit-for-tat trade dispute” represents “another point of tension between the Asian country and the West,” Mould said.
It could “push up the price of [brandy] for drinkers and potentially lead to reduced sales of EU-originated brandy if the consumer seeks cheaper alternatives,” Mould added.
Jeffries analysts said brandy prices could rise by 20 per cent.
French cognac lobby group BNIC called the move “catastrophic” for the country’s brandy industry.
China also said it was considering hiking tariffs on imports of large-engine vehicles—which would hit Germany—as well as on pork and dairy products.
City AM has contacted Rémy Cointreau and Pernot Ricard for comment.