Casey Hall, Lucy Craymer and Mei Mei Chu
SHANGHAI/WELLINGTON (Reuters) – Global food companies from dairy producers to pork exporters are on high alert over possible retaliatory tariffs from China following the European Union’s decision on Wednesday to impose anti-subsidy tariffs on Chinese-made electric vehicles.
Chinese state media reported that domestic companies are preparing to demand investigations into imports of some dairy products and pork into the EU over anti-subsidy or anti-dumping concerns, which could lead to a lengthy trade freeze.
“If you have additional trade barriers, it could cause… upheaval in global markets,” Kimberley Crewter, chief executive of the representative body of the New Zealand Dairy Association.
New Zealand is the world’s largest exporter of dairy products and is also a production base for foreign companies, including French dairy producer Danone.
“We always prefer to see situations where trading is stable and certain… Markets don’t like uncertainty,” Krueter added.
The EU was China’s second-largest source of dairy products, accounting for at least 36% of total import value in 2023, second only to New Zealand, according to Chinese customs data. Australia was the No. 3 exporter.
While it remains unclear what products China might target in retaliation, whey powder, cream and fresh milk were the main EU dairy exports to China last year, worth €1.7 billion ($1.8 billion), according to according to the European Commission. Directorate General for Agriculture and Rural Development, quoted by Eurostat.
Countries including the Netherlands, France, Germany, Ireland and Denmark have the largest dairy industry influence on the Chinese market.
The Netherlands, Denmark and France are also major pork suppliers, although last year China’s largest supplier was Spain, which accounted for almost 23% of China’s total pork imports, followed by Brazil and the United States.
Christina Alvarado, commercial manager for data and analytics at the New Zealand exchange, said Chinese tariffs or trade barriers against EU dairy products could help New Zealand further increase its market share.
New Zealand’s largest producers Fonterra and A2 already trade heavily with China, and Australia and New Zealand have free trade agreements with China that make their imports duty-free.
China imported $848 million worth of dairy products from Australia last year, according to Chinese customs data. New Zealand dairy imports reached $5.52 billion in 2023, representing almost half of the total value of dairy imports.
OPEN TRADE
As trade tensions between the bloc and China escalate, some European officials have warned against imposing import tariffs on food.
EU Agriculture Commissioner Janusz Wojciechowski told Reuters during a visit to China in late April that his intention was to “avoid, as far as possible, agriculture paying for problems in other sectors.”
“The position of the European Union is that open food trade is a very important tool for ensuring food security at a global level,” he added.
China has historically taken a different stance on food products, which have often been the target of retaliatory tariffs imposed as part of previous trade disputes.
In January, brandy was the subject of an investigation launched by Beijing in what was seen as retaliation for France’s support for an EU investigation into Chinese-made electric vehicles.
China also passed legislation in April strengthening its ability to retaliate if the United States or EU impose tariffs on exports from the world’s No. 2 economy.
Australian wine and barley are the subject of an anti-dumping investigation launched by Beijing following calls from Australia for an independent investigation into the origins of the 2020 COVID-19 virus. China has only recently lifted these prohibitive tariffs.
Beijing has also targeted Australian beef and lobster following separate investigations.
($1 = 1.6292 New Zealand dollars)