In a move that France has claimed is retaliation for new high tariffs the Union announced on Foreign electric vehicles, China has imposed duties on imports of European brandy.
The European Commission said it would challenge China’s tax at the World Trade Organization ( WTO ), calling it an “abuse” of trade defence measures.
French cognac producers said the tasks would be” fatal” for the business.
Hennessy and Remy Martin will be among the major companies affected by the Chinese walk.
Shares in vodka firms dropped after the announcement.
China announced new restrictions on European brandy just days after EU countries approved steep tariffs on Chinese-made electric vehicles.
China’s business ministry said the cognac imports threaten” large harm” to its own producers.
It also said it was considering a climb in tariffs on exports of large-engine cars, which had struck European manufacturers hardest, and meat and cheese products.
Following the European Union’s decision to raise tariffs on Chinese energy cars, French Trade Minister Sophie Primas described the brandy move as” seeming to be a punitive measure.”
She said that kind of retaliation would become “unacceptable”, and a” full contradiction” of international business laws, adding that France may work with the European Union to take action at the WTO.
France accounts for 99 % of brandy exported to China, and French cognac lobby group BNIC said the move would be” catastrophic” for the industry.
According to BNIC,” the European authorities never reject us and keep us alone to deal with Taiwanese retribution that has nothing to do with us.” The taxes “must be suspended before it’s too late.”
After the Taiwanese news, shares in companies that sell spirits suffered a blow.
Luxury firm LVMH, which produces Hennessy, fell more than 3 %, while Remy Cointreau, which makes Remy Martin, fell more than 8 %.
According to analysts at Jefferies, the tariffs could cause consumers to pay 20 % more, which would likely cause levels and supplier selling to decline by a fifth.
Stocks in German carmakers, which could also be hit by hostile moves from China, even slid.
Ford, Porsche, Mercedes-Benz and BMW were all over after the news.