China has escalated its trade confrontation with the European Union by announcing provisional anti-subsidy tariffs of up to 42.7% on select dairy imports from the bloc, effective from December 23, following a preliminary investigation that concluded EU subsidies have inflicted “substantial damage” on its domestic dairy sector.
The move, detailed in a statement from the Ministry of Commerce, targets a range of products including fresh and processed cheeses, blue-veined varieties such as France’s renowned Roquefort—aged in the caves of Roquefort-sur-Soulzon—curd, and certain milk and cream with fat content exceeding 10%.
Notably, infant formula, a high-value export category, has been spared, providing some relief to major players like Danone and Nestlé.
Tariff rates are tiered based on cooperation during the probe: around 60 participating companies, including Denmark’s Arla Foods (known for brands like Lurpak and Castello) and Ireland’s Kerry Group, will face duties between 21.9% and 29.7%, while non-cooperators are slapped with the maximum 42.7%.
Most firms are expected to pay around 30%, according to industry estimates.
The investigation, initiated in August 2024, scrutinized subsidies under the EU’s Common Agricultural Policy (CAP) and national schemes, which Beijing claims have enabled unfair pricing amid China’s domestic challenges, like a milk oversupply, declining prices, and shifting consumer demand driven by an aging population and economic slowdown.
This action fits into a broader pattern of retaliatory measures, sparked by the EU’s October 2024 imposition of up to 45.3% tariffs on Chinese electric vehicles (EVs) after a year-long anti-subsidy probe that found state aid distorted competition.
Beijing has since targeted other EU exports, including brandy (with provisional duties up to 34.9% in July 2025, later challenged by the EU at the World Trade Organization) and pork.
Just last week, China finalized pork tariffs at 4.9% to 19.8% for five years—significantly lower than September’s provisional 62.4%—potentially signaling room for negotiation amid ongoing talks.
Analysts view the dairy tariffs as calibrated pressure, exempting sensitive items while hitting symbolic EU strengths like French cheeses and Irish milk powders.
Economically, the tariffs could disrupt $589 million in annual EU dairy exports to China (stable from 2023), representing about 5% of the bloc’s total dairy shipments but a larger share for specific nations.
Ireland, a top supplier of milk powders and cheeses, stands to lose the most, with exports valued at over €200 million annually; France follows with its premium cheeses like Roquefort and Camembert, potentially facing €150 million in hits.
Denmark and the Netherlands, key players via Arla and FrieslandCampina, could see combined losses exceeding €100 million.
For China, the measures bolster domestic giants like Mengniu and Yili, which have invested billions in modernizing farms but struggle with overcapacity—producing 45 million tons of milk annually amid stagnating consumption.
Shares in Mengniu briefly climbed before closing flat, reflecting optimism for local market share gains.
Stakeholder reactions have been swift and critical. The European Commission labeled the tariffs “unjustified and unwarranted,” based on “questionable allegations and insufficient evidence,” and vowed to submit detailed comments while pursuing dialogue.
Industry voices echoed dismay: Conor Mulvihill of Dairy Industry Ireland called dairy a “political pawn” in the EV spat, while Henrik Damholt Jorgensen of the Danish Dairy Board urged negotiations to avert long-term harm.
French producers, already reeling from domestic challenges like labor shortages, fear rerouting to less lucrative markets like New Zealand or the U.S.
Broader implications highlight deepening EU-China trade fissures. China’s trade surplus with the EU has ballooned to a record $300 billion in 2025, more than double imports, fueling accusations of dumping and overcapacity.
French President Emmanuel Macron, in recent interviews, has warned of Europe’s “life or death” industrial moment, labeling China’s surplus “untenable” and urging investments in the EU to avoid further barriers.
Dutch officials have echoed concerns over Beijing’s retaliatory tactics, such as export restrictions on chips.
As provisional measures, these tariffs could be adjusted in a final ruling expected by mid-2026, similar to the pork case, but analysts warn of potential escalation into luxury goods or autos if EV talks stall.
