2023 Investigation Launch Marks Beginning of EU-China Trade Confrontation

China has concluded the first phase of an anti-subsidy investigation by imposing provisional tariffs between 21.9% and 42.7% on European dairy imports. The measures, effective from Tuesday, predominantly result in duties around 30% for most companies. The decision is widely seen as retaliation for EU electric vehicle tariffs.
Brussels has strongly objected to the decision, calling it unjustified and based on insufficient evidence. The European Commission maintains that the investigation relies on questionable allegations without adequate proof. Officials are reviewing the tariffs and preparing a comprehensive response.
Trade tensions erupted in 2023 when the European Commission—which oversees the bloc’s trade policy—launched an anti-subsidy investigation into Chinese-made electric vehicles. Beijing has imposed tariffs on imports of EU brandy, pork and now dairy, measures seen as retaliatory. However, China has occasionally demonstrated flexibility in final rulings.
The tariff structure affects around 60 companies with differentiated rates. Arla Foods will pay between 28.6% and 29.7%. Sterilgarda Alimenti received the most favorable treatment at 21.9%, while FrieslandCampina’s operations face the steepest penalties at 42.7%. Non-participating companies automatically receive maximum tariffs.
The protective measures arrive as Chinese dairy producers struggle with surplus production and declining profitability. Falling birthrates and budget-conscious consumers have reduced demand. Last year, China imported $589 million in affected dairy products. The government has urged domestic producers to scale back output and reduce the number of older, less productive cattle.