EU dairy faces China tariff threat

Global food companies, particularly in the dairy and pork sectors, are bracing for potential retaliatory tariffs from China following the European Union’s decision on Wednesday to impose anti-subsidy duties on Chinese electric vehicles (EVs).

China’s state media indicates that domestic firms are preparing to request investigations into EU dairy and pork imports, which could lead to significant trade disruptions.

New Zealand, the largest exporter of dairy products globally, stands to benefit as its dairy sector is largely tariff-free under free trade agreements with China.

In 2023, China imported $5.52 billion worth of dairy products from New Zealand and $848 million from Australia. The EU, China’s second-largest dairy source, accounted for 36 per cent of the value of its dairy imports last year.

Key EU dairy exports to China include whey powder, cream, and fresh milk, valued at €1.7 billion ($1.8 billion) in 2023.

Major EU suppliers of dairy and pork include the Netherlands, France, Germany, Ireland, and Denmark, with Spain leading in pork exports to China.

EU Agriculture Commissioner Janusz Wojciechowski emphasised the importance of open food trade for global food security and expressed a preference to avoid agricultural trade barriers amid rising EU-China tensions.

Historically, China has targeted food products during trade disputes, as seen in its recent measures against Australian wine and barley.

As tensions escalate, European officials caution against further trade barriers, underscoring the potential for increased market volatility and reshuffling of global trade patterns.

Attribution: Reuters.