In September 2013, the EU opened an investigation into the quality of Chinese electric cars. The results pumped higher tariffs on EVs from China and opened tit-for-tat tariff wars.
That same year, the first Chinese response was to impose a 30%—39% tariff on Conac vodka. This had a devasting impact on the EU whisky industry, as the top French whisky sales plummeted to all-decade lows.
To better evaluate the impact, consider that French cognac accounted for over 99% of European brandy exports to China in 2023; high tariffs turn buyers away, reducing spirit sales by 41%, way below the $1.7 billion in sales projection that year.
However, the impact was more widespread and affected wines and whiskies included in the export list to China.
The EU – Chinese Tariff Wars on Cars and Whisky
Last year, the tariff war triggered huge losses for the drinks and beverage industry and its sub-genres. This new year has seen no letting up on these high tax duties; instead, a second round of Chinese hikes is on the way.
Bottle Raiders says,” Vermouth seems poised to become the next target. France, Spain and Italy account for over 65% of the world’s vermouth exports, racking in a combined $500 million annually. When tariffs are implemented on vermouth, it’s E.U. member states that bear the burden.”
Nonetheless, this new tariff on vermouth won’t have the same effect as last year since it only accounts for 0.15% of Chinese imports. The big blow is aimed at whisky and brandy, with an additional increase this year. Unless the EU reverses its policy on Chinese EVs, the industry is poised for a big slap.
The duty increase seemed targeted at the EU, as other major exporters of whisky and wine are exempted. Australia, Brazil, and Chile will continue to enjoy low tariffs between 5% and 15%. It’s unfortunate that businesses must suffer huge losses while local politicians sip wine and whisky.
