The trade conflict between China and the European Union intensified this week. China has launched an investigation into EU dairy products, accusing them of benefiting from unfair government subsidies. This move follows the EU’s decision to impose additional tariffs on most electric vehicles (EVs) imported from China.

China's Ministry of Commerce said local dairy producers requested the probe, pointing to 20 different subsidy programs that may support the EU dairy industry. These subsidies include financial aid for farming equipment, support for young farmers, and environmental and administrative benefits. The ministry noted that there were enough grounds for an anti-subsidy investigation, which could take up to 18 months, according to CNN.

The EU will monitor the investigation closely to ensure it adheres to World Trade Organisation rules. Olof Gill, a spokesperson for the European Commission, said the EU would defend its dairy industry and its common agricultural policy.

The China Chamber of Commerce for Import and Export of Machinery and Electronic Products has strongly criticised the EU’s plan to impose tariffs of up to 36.3% on Chinese EVs. The chamber argued that the EU’s anti-subsidy probe was not based on an industry complaint, lacked transparency, and did not objectively assess the impact on the EU industry.

The European Commission published a draft plan for these tariffs, which are slightly revised from earlier provisional rates. This follows a July announcement of provisional tariffs of up to 37.6% on Chinese EVs. The EU began its investigation into Chinese EVs in October 2023.

Since then, the EU has introduced over 40 trade and investment restrictions against China, including 35 investigations into Chinese products worth $28.4 billion. Meanwhile, the United States has imposed new sanctions on more than a dozen Chinese and Hong Kong companies for their support of Russia’s war in Ukraine.

Image source: The Print