China Hits EU Dairy with Retaliatory Tariffs
China has slapped duties of up to 42.7% on European Union dairy products. The move is seen as direct retaliation for EU tariffs on Chinese electric vehicles, escalating trade tensions and highlighting the risk of sudden market access changes for food exporters.
The EU's tariffs on Chinese electric vehicles, which range from 17% to 35.3% on top of an existing 10% duty, were imposed after a year-long investigation into subsidies in the Chinese EV industry. This move prompted swift retaliation from Beijing, not just in the dairy sector but also with investigations into European pork and brandy. China's initial provisional duties on EU dairy were as high as 42.7%, targeting products like milk, cream, and cheese, including iconic French Roquefort. These have since been reduced to a range of 7.4% to 11.7% after an anti-dumping investigation concluded. The EU's trade deficit with China reached €305.8 billion in 2024, a key factor in the bloc's increasingly assertive trade stance. This escalation highlights the vulnerability of agricultural exporters to geopolitical disputes, a lesson learned during the 2018 U.S.-China trade war when American soybean exports to China fell by 75%. Such conflicts can cause sharp price volatility and force a rapid realignment of global supply chains as buyers seek alternative suppliers. For rice exporters, the situation is compounded by policy shifts from major producers. India, the world's largest rice exporter, recently lifted its ban on broken rice exports, a move expected to increase global supply and put downward pressure on prices that had previously hit 15-year highs. Meanwhile, Vietnam, which surpassed Thailand as the world's second-largest rice exporter in the first half of 2025, is focusing on higher-value premium rice to compete. In Europe, market access for premium and organic rice is governed by strict quality and certification standards. Exporters must comply with EU regulations on organic production (Regulation (EU) 2018/848) and Maximum Residue Levels (MRLs) for pesticides. Certifications like the Sustainable Rice Platform (SRP) are gaining recognition and can provide a competitive edge in markets like the Netherlands, a major European rice importer. The Thai baht has seen fluctuations against the euro, with the exchange rate impacting the competitiveness of Thai exports. The baht has strengthened significantly against the US dollar over the past year, hovering near its highest levels since 2021, a trend that exporters must monitor closely.
