China announced on Friday that it will exempt important French cognac producers, such as Pernod Ricard and Remy Cognac, from high anti-dumping tariffs, if they agree to set minimum prices of imports for the Chinese markets.
This decision comes after a trade investigation that lasted for months and focused mainly on France’s cognac industry.
The Chinese Commerce Ministry announced that although duties up to 34.9% will be levied on European brandy imported starting July 5,2025, those producers who comply with the minimum price agreements can avoid these tariffs.
Prices were not revealed.
This ruling clarifies a standoff in trade that had severely affected French cognac exports into China, the most important global market for this spirit.
BNIC, the industry association of BNIC (Bureau National Interprofessionnel du Cognac), reports that monthly exports from China have fallen by as much as 70 percent since China implemented provisional tariffs in October 2024 as a retaliation against EU tariffs on Chinese electric vehicles.
Temporary relief from the Minimum Price Deal
Remy Cointreau (owner of Remy Martin) welcomed the agreement, calling it “substantially lower punitive alternatives.” He added that the deal allows the company to keep investing in China.
Pernod Ricard, whose portfolio includes Martell, and LVMH – whose portfolios, respectively, include Hennessy and Martell – are expected to also benefit from the new agreement.
French industry groups stress that, while the agreement avoids high tariffs immediately, the result is less favorable than what existed before the investigation.
BNIC issued a press release saying that “this is why we are renewing our appeal to the French Government and the European Commission for them to come to an agreement as quickly as possible with the Chinese Authorities to get back to a position without anti-dumping duty.”
The ministry has confirmed the refund of deposits made under provisional duties collected since October 20, 2024.
It was an important sticking point during negotiations, especially for firms with limited cash flow.
Non-compliant manufacturers still face tariffs
China’s ruling states that those producers who do not meet minimum prices or who violate the agreement will be charged the anti-dumping rate up to 34.9 percent for the following five years.
In a statement, the Commerce Ministry made it very clear that strict enforcement will take place. However, it did not specify how this compliance will be monitored.
This decision is in line with the increasing diplomatic activities between France and China.
Jean-Noel Barrot, French Minister of Digital Affairs Jean-Noel Barrot will meet Chinese Commerce minister Wang Wentao later in the day on Friday. Discussions are expected to cover trade matters ahead of an EU-China summit at the end this month.
The industry reacts to the lingering uncertainty
After a brief decline, shares of French spirit makers recovered some ground after it was revealed that the new Chinese duties on European Union brandy could be avoided if minimum prices were met.
Remy Cointreau’s stock was up 0.13% at 12:30 pm after a decline of 1% in early trading. Pernod Ricard was also down 0.22%, but it was still in the black.
LVMH fell by 1.44%, after losing 2.1% during European morning trading.
Analysts stated that the market wanted a full rollback in duties and not just a conditional waiver.
Arnaud Atier, an equity analyst with ODDOBHF, said that Pernod Ricard’s customer base may be more vulnerable to increases in price because it has less exposure to ultra premium cognac.
Industry observers are cautious and note that the new framework, even with its adjustments, still introduces rigidity in pricing as well as potential compliance burdens.
The Brussels-based spiritsEUROPE trade group called the ruling “an important barrier to legitimate commerce” and stressed that European producers have provided proof over the last 18 months disproving dumping allegations.
The trade tensions extend beyond spirits
China’s brandy investigation, although now partly resolved, was part of a larger effort to target European products amid the escalating dispute over trade.
China also began investigations on European dairy and pork products.
French officials say that China’s interest in cognac is politically motivated given France’s support of EU tariffs against Chinese electric vehicles.
Analysts think the brandy resolution signals both parties’ willingness to avoid a full-blown commercial war.
A senior French source in the industry told Reuters that “both sides, France as well as China, didn’t want it to go out of control.” They wanted a solution.”
Tensions are high despite the final anti-dumping duty of 32.2% on EU brandys and spirits that do not comply with EU standards, as well as little progress in the EV dispute.
As new developments unfold, this post China Spares Major French Cognac Makers from Tariffs in Brandy Dispute may be updated.
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