EU-China trade: Beijing imposes 42.7% provisional duty on dairy imports from European Union; cites harm to domestic industry

China on Monday announced imposing provisional anti-subsidy duties on dairy products imported from the European Union, after concluding that the inflow of these goods has harmed its domestic dairy sector. The Chinese commerce ministry, cited by Reuters, said that the duties are set between 21.9% and 42.7% and will be effective from December 23. The announcement comes after an investigation which was launched more than a year ago. According to preliminary findings, dairy products originating in the EU were found to have received subsidies that caused significant damage to Chinese producers. The move comes at a time when the two countries' already have strained trade relations, since 2023, when the European Commission initiated an anti-subsidy probe into electric vehicles manufactured in China.

Beijing subsequently opened its own investigations into EU imports of brandy, pork and dairy products, actions that were seen as a response to Europe’s scrutiny of Chinese EVs. Among individual companies, Italy’s Sterilgarda Alimenti SpA will be subject to the lowest duty rate of 21.9%. The highest rate of 42.7% will apply to FrieslandCampina Belgium NV and FrieslandCampina Nederland BV, the commerce ministry said.

EU firms that did not take part in the investigation will also face the top levy, Reuters reported. The ministry added that 12 French companies will be charged duties of 29.7%, while roughly 50 other firms from Italy, France and Germany will be subject to a rate of 28.6%. China is a major market for European dairy exporters. Customs data, cited by Reuters shows that the EU is China’s second-largest supplier of dairy products, behind New Zealand.

EU figures from 2023 indicate that China ranked as the second-largest destination for skimmed milk powder exports, and the fourth-largest market for butter and whole milk powder. Responding to concerns over trade remedies, an official from the commerce ministry’s trade remedy department said China has exercised caution in deploying such measures. The official noted that no new trade remedy investigations targeting the EU have been launched this year, with final rulings issued only in 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.