China-EU Trade Tensions Rise: Dairy Subsidy Probe and EV Tariffs Spark Controversy

The trade war between China and the EU intensifies as China launches a probe into EU dairy subsidies, following the EU’s decision to impose tariffs on Chinese electric vehicles. Both regions are defending their industries amidst escalating economic tensions and regulatory investigations.

The trade war between China and the European Union has escalated after Beijing initiated an investigation into EU dairy products over alleged government subsidies. The announcement came just a day after the EU confirmed additional tariffs on most electric vehicles imported from China.

China's Ministry of Commerce stated that local dairy producers requested the probe, citing twenty different subsidy programs that could benefit the EU dairy industry. These include financial support for farming equipment, supplementary income for young farmers, and environmental and administrative subsidies. An initial review provided sufficient grounds for an anti-subsidy investigation, which could take up to 18 months, according to a ministry statement.

The EU's executive arm will follow Beijing's investigation closely and intervene as needed to ensure compliance with World Trade Organization rules. Olof Gill, a spokesperson for the European Commission, asserted the Commission's commitment to defending the interests of the EU dairy industry and the common agricultural policy.

In response, the China Chamber of Commerce for Import and Export of Machinery and Electronic Products voiced strong opposition to the European Commission's plan to impose tariffs of up to 36.3 percent on Chinese electric vehicles. The industry body criticized the EU's anti-subsidy probe into Chinese EVs for lacking transparency and an objective analysis of the damage to the EU industry.

On Tuesday, the European Commission published a draft plan to finalize the tariffs at slightly revised rates, pending approval by EU member states. This followed provisional tariffs of up to 37.6 percent announced in July. The EU has launched 35 trade remedy investigations into Chinese products worth $28.4 billion since October 2023.

The United States also added to the tension by imposing sanctions on over a dozen companies in China and Hong Kong for supporting Russia's war in Ukraine as part of a broader package of nearly 300 new sanctions unveiled Wednesday.

(With inputs from agencies.)