China spares major cognac makers from EU brandy dumping duties

China will levy duties of up to 34.9% for a period of five years from July 5, 2025 on brandy originating in the European Union, most of it cognac from France, the Chinese Commerce Ministry said in a final ruling.

But most of France's cognac industry including big brands LVMH-owned Hennessy and Remy Martin will be exempt from the duties provided they sell at a minimum price, the ministry said in a statement. It did not disclose the minimum prices.

Beijing launched its anti-dumping probe on EU brandy in January last year, in what was widely viewed as retaliation for the EU's decision to impose hefty import tariffs on China-made EVs.

French cognac makers generate global exports of $3 billion a year combined. They have complained they are collateral damage in the broader trade row between Brussels and Beijing.

In addition to the reprieve, China's commerce ministry will also give back deposits made by brandymakers since October 2024, when provisional duties were imposed. The refund issue, which weighed particularly heavily on smaller producers, was one of the sticking points in months-long negotiations, two industry sources said.

Remy Martin-owner Remy Cointreau said in a statement that the deal on minimum price commitments constituted "a substantially less punitive alternative" thus enabling "the strengthening of some investments in China."

Even so, an EU spokesperson said the tariffs were unfair and unjustified.

The move comes as China's foreign minister Wang Yi is visiting Europe this week seeking to lay the groundwork for a summit between EU and Chinese leaders later this month, with the EV dispute and China's curbs on the export of rare earths high on the agenda.

Wang was due to meet his French counterpart in Paris later on Friday.

Last week, Reuters reported that French cognac makers had reached a tentative deal on minimum import prices for the Chinese market, but that China would only finalise the deal if progress was made regarding EU tariffs on Chinese-made EVs.

Pernod Ricard said it regrets the increase in the cost of operating in China but additional costs are significantly less than would be the case if tariffs had been made permanent.

LVMH and Campari did not immediately respond to requests for comment on Friday.

Shares of French spirits makers were mixed as investors digested the ruling, with many relieved Beijing had agreed to drop tariffs in return for price commitments.

Monthly cognac exports to China, the world's most valuable market for the spirit, have fallen by as much as 70% due to the trade dispute, according to data from the Bureau National Interprofessionnel du Cognac (BNIC), a French cognac industry group.

Remy Cointreau shares were up 0.54% and Pernod was down 0.3%, having regained some ground lost earlier in the day. LVMH was down 1.5%.

European spirits makers have also been grappling with a downturn in sales in the United States where inflation has deterred drinkers from pricier spirits. President Donald Trump has also threatened tariffs on imports from the EU.

The minimum price pledges could translate into some price increases, but they will likely be small and it is too early to tell whether there could be an impact on shelf prices, a senior industry source with knowledge of the China negotiations said.

"The French government has been raising this repeatedly with the Chinese government and saying this is a major bone of contention," said a senior French industry source with knowledge of the China negotiations, who declined to be named because of the sensitivity of the matter.

"I think both sides, France and China, did not want this to get out of hand, they wanted to find a resolution." BNIC said that the deal for minimum price commitments will be "less unfavourable" than anti-dumping duties, but still worse for its members than the historical pre-investigation norm.