China has concluded the first phase of an anti-subsidy investigation by imposing provisional tariffs between 21.9% and 42.7% on select European Union dairy imports. The measures, effective immediately, are largely seen as retaliatory action against EU tariffs on Chinese electric vehicles. Most European companies will face duties around 30%, affecting products from basic milk to specialty protected designation cheeses.
The European Commission has rejected the tariffs as illegitimate, asserting they are based on flawed investigation methods and insufficient proof. Commission officials are conducting their own review of China’s decision and intend to submit formal objections. The spokesperson emphasized that the allegations underlying the investigation lack credibility.
This development marks another phase in trade tensions that emerged in 2023 following the European Commission’s investigation into Chinese EV subsidies. China has retaliated across multiple product categories, including alcoholic beverages and pork products, though Beijing has occasionally demonstrated flexibility by reducing final tariffs below provisional levels or exempting specific major producers.
Approximately 60 European dairy companies will face the new tariffs at varying rates. Arla Foods, which produces brands like Lurpak and Castello, will pay between 28.6% and 29.7%. Italy’s Sterilgarda Alimenti secured the lowest rate at 21.9%, while FrieslandCampina’s operations in Belgium and the Netherlands face the highest rate of 42.7%. Companies that refused to cooperate with the investigation automatically receive maximum penalties.
The tariffs arrive as China’s domestic dairy industry struggles with surplus production and declining prices. Falling birthrates and more budget-conscious consumers have reduced demand for dairy products. Last year, China imported $589 million worth of dairy products now subject to investigation. The Chinese government previously urged domestic producers to scale back output and reduce their herds to stabilize prices.