Key Points
- China lowered proposed dairy tariffs from a high of 42.7% to 11.7%.
- The investigation is widely seen as retaliation for EU tariffs on Chinese EVs. European dairy associations confirmed the new, lower duty rates.
- The move targets European farmers to pressure EU leaders on trade policy.
- Reducing the rate suggests China may want to avoid a total trade collapse.
China has decided to cut back significantly on the extra taxes it planned to slap on dairy products coming from the European Union. According to two major European industry groups, Beijing has lowered the proposed tariff rate to a maximum of 11.7%. This is a huge drop from the steep 42.7% rate they threatened just last month.
This move comes as the conclusion to an anti-subsidy investigation that Beijing launched recently. Most experts view this entire investigation as direct payback.
The European Union recently imposed heavy tariffs on Chinese electric vehicles, arguing that the Chinese government unfairly subsidizes its carmakers. In response, China launched probes into European products like brandy, pork, and dairy to hit back.
The European Dairy Association and Eucolait confirmed the new numbers. While any extra tax is bad for business, a rate of 11.7% is much easier to swallow than nearly 43%. The original proposal would have been devastating for European cheese, cream, and milk exporters who rely on the massive Chinese market to sell their goods.
The reduction suggests that while China wants to send a tough message, it might not want to start an all-out trade war that damages food supplies or ruins relationships entirely.
The trade fight between Brussels and Beijing has been heating up for over a year. The EU is worried that cheap Chinese green technology is wiping out European manufacturers. China, on the other hand, argues that the EU is being protectionist and unfair.
By targeting dairy, China went after a politically sensitive sector in Europe. Farmers have a lot of political sway, and Beijing likely hoped that squeezing them would force European leaders to back down on the car tariffs.
So far, neither the European Commission nor the Chinese Ministry of Commerce has officially commented on the change since the news broke over the weekend.
However, this adjustment offers a glimmer of hope. It signals that there is still room for negotiation between the two economic giants. Instead of escalating the fight to the breaking point, China seems to be calibrating its response.
