The European Union has issued a stark warning to China, urging the Asian giant to adapt its economic practices to resolve an escalating tariff dispute. European Council President Charles Michel, speaking during a Southeast Asian summit in Laos, stressed the need for China to address concerns over its generous subsidies for domestic industries, which Brussels argues create an unfair advantage over European competitors.
Michel, meeting with Chinese Premier Li Qiang on the sidelines of the summit, acknowledged the possibility of reaching a deal in the coming weeks. However, he also underscored the complexity of the situation, emphasizing the need for China to recognize the importance of a more balanced economic relationship. “I have the impression that the door is not closed, but it’s a very difficult situation, it’s very challenging,” Michel stated. “We count on China to adapt its behaviour and to understand that we have to rebalance the economic relationships for more fairness, for fair competition, for a more level playing field.”
The EU’s concerns stem from China’s generous subsidies, which Brussels argues unfairly undercut European businesses. As a result, the EU has imposed significant tariffs, reaching up to 35.3%, on Chinese-made electric cars. China has retaliated with tariffs on EU-made brandy, particularly impacting French producers. This dispute has also extended to investigations by the EU into Chinese subsidies for solar panels and wind turbines.
Michel affirmed the EU’s commitment to protecting its citizens and businesses from unfair competition, stating that the bloc will no longer tolerate “naive” approaches regarding government subsidies. Despite the escalating tensions, Michel expressed hope for a resolution through ongoing dialogue. “I still hope that it will be possible in the days to come, in the weeks to come, to make an agreement to find some solutions,” he stated. “But we have very strong and legitimate interests and it is the responsibility of the European Union to defend our people, to defend our citizens.”
The latest development in the dispute saw China implementing new brandy tariffs of up to 38.1%, officially described as an anti-dumping measure to protect domestic spirit producers. These tariffs, which came into effect on Friday, have sparked concern among French cognac makers, as China is the largest importer of brandy, with most of it sourced from France. The EU has vowed to challenge these “unfounded” measures through the World Trade Organization.
