China’s 35% tariffs on EU brandy threaten French cognac exports amid deepening trade tensions

French cognac producers are bracing for significant losses as China enacts anti-dumping tariffs of up to 34.9% on EU brandy imports starting July 5, 2025. This move directly threatens a market worth €1.4 billion annually, with exports already suffering a steep decline in anticipation of the measure.

The tariffs, which will remain in place for five years, apply to brandy shipped in containers smaller than 200 liters, a category that encompasses nearly all French cognac sold in China. The industry now faces a critical test of resilience as it navigates the fallout from this trade escalation.

Industry leaders warn that the new duties could have lasting effects on jobs and investment in France’s spirits sector, as China accounts for a quarter of global cognac sales. The pressure is mounting for both governments to find a diplomatic solution.

Exemptions and Price Commitments Reshape the Playing Field

Several major cognac producers, including Pernod Ricard’s Martell and Remy Cointreau’s Remy Martin, have negotiated exemptions from the steepest tariffs by agreeing to minimum price commitments. This arrangement allows them to avoid the full 34.9% duty, provided they maintain prices above an agreed threshold.

Jas Hennessy, the iconic French brand, faces the maximum tariff if it fails to uphold its price commitment. Remy Martin and Martell would incur duties of 34.3% and 27.7%, respectively, if they breached their agreements.

These exemptions offer some relief but do not eliminate the broader threat to the sector. Smaller producers and those unable to secure similar deals remain exposed to the full brunt of the new tariffs.

Did you know?
The French region of Cognac has exported its signature spirit to China for over a century, but only in the past two decades has China become one of its largest and fastest-growing markets, accounting for a quarter of global cognac sales.

What Prompted China’s Tariff Decision

After a year-long investigation, China's Ministry of Commerce concluded that the dumped EU brandy on the Chinese market was causing "substantial damages" to domestic producers. Months after the EU launched its own investigation into Chinese electric vehicle subsidies, the probe sparked suspicions of retaliatory motives.

The anti-dumping duties are the latest salvo in a widening trade dispute that now spans electric vehicles, solar panels, and other strategic industries. China’s authorities insist the measures are justified by evidence of unfair pricing, a claim the EU strongly contests.

The European Commission has condemned the tariffs as “unfair” and “unjustified,” vowing to challenge the decision at the World Trade Organization. The standoff underscores the fragility of EU-China economic relations.

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Trade War Fallout Hits Both Sides

French cognac exports have already experienced a significant decline of up to 70% since the onset of the dispute due to the new tariffs. The Bureau National Interprofessionnel du Cognac estimates the industry is losing €50 million per month as a result of the ongoing tensions.

For China, the move is a calculated response to the EU’s recent tariffs on Chinese-made electric vehicles, which reached as high as 45%. Both sides are leveraging their most valuable exports in a high-stakes contest for economic advantage.

The escalation threatens to disrupt supply chains, raise consumer prices, and strain business ties that have taken decades to build. Industry groups warn that the imposition of duties could set a precedent for further trade barriers across other sectors.

The Road Ahead for EU-China Trade Relations

Diplomatic efforts to resolve the dispute have so far yielded only partial relief, with exemptions for some major brands but no comprehensive settlement. The European Commission continues to push for dialogue, but deep-seated tensions over trade imbalances and industrial policy remain unresolved.

The outcome of this conflict will shape the future of EU-China trade, with potential ripple effects for global markets. Both sides face mounting pressure from domestic industries to defend their interests, raising the risk of further escalation.

The stakes for exporters, consumers, and policymakers are significantly high as the world's two largest trading blocs engage in this conflict. The next moves in this economic chess match will be closely watched by international observers.