In a decision that brings partial relief to the European spirits industry, China on Friday said it would exempt key French cognac producers such as Pernod Ricard, LVMH, and Remy Cointreau from steep anti-dumping duties—provided they commit to minimum import prices for the Chinese market.
The decision follows a months-long trade investigation into EU brandy imports, primarily focused on France’s iconic cognac sector.
China’s Commerce Ministry said that while duties of up to 34.9% would be imposed on European brandy imports starting July 5, 2025, producers that comply with minimum pricing agreements will avoid the tariffs.
The minimum prices themselves were not disclosed.
The ruling brings clarity to a trade standoff that has severely impacted French cognac exports to China—the most valuable global market for the spirit.
According to industry group BNIC (Bureau National Interprofessionnel du Cognac), monthly exports to China had fallen as much as 70% since China imposed provisional duties in October 2024, retaliating against EU tariffs on Chinese-made electric vehicles.
Minimum price deal offers temporary relief
Remy Cointreau, owner of the Remy Martin brand, welcomed the agreement as a “substantially less punitive alternative,” adding that it enables the company to continue investments in China.
Pernod Ricard and LVMH, whose portfolios include Martell and Hennessy respectively, are also expected to benefit under the new arrangement.
While the deal avoids the immediate impact of high tariffs, French industry bodies stress that the outcome is still less favorable than the pre-investigation status quo.
“This is why we renew our call to the French government and the European Commission to reach a political agreement with the Chinese authorities as soon as possible to return to a situation without anti-dumping duties,” BNIC said in a statement.
Smaller producers may also find some relief, as the ministry confirmed that deposits collected under the provisional duties since October 2024 would be refunded.
This was a key sticking point in negotiations, particularly for companies with tighter cash flows.
Tariffs still loom for non-compliant producers
China’s final ruling maintains that producers who fail to meet the minimum price requirements—or who breach the agreement—will be subject to the full anti-dumping duty rate of up to 34.9% for the next five years.
The Commerce Ministry’s statement made it clear that enforcement would be strict, even as it stopped short of detailing how compliance will be monitored.
The decision coincides with rising diplomatic activity between France and China.
French digital affairs minister Jean-Noël Barrot was set to meet Chinese Commerce Minister Wang Wentao in Paris later on Friday, with discussions expected to include trade issues ahead of a China-EU summit later this month.
Industry reacts to lingering uncertainty
Shares of French spirits makers regained some ground on Friday after an initial decline when it became known that they could avoid China’s new duties on brandy from the European Union if they followed minimum price commitments.
Remy Cointreau was in the green by 0.13% after declining in early trade, while Pernod Ricard’s eased some of the losses and was down by 0.22% at 1:20 pm, after declining 1% earlier.
LVMH was down by 1.44% after losing 2.1% in mid-morning European trading.
Analysts said the market had hoped for a complete rollback of duties, not a conditional exemption.
“Pernod Ricard may be more penalized than Remy Cointreau, with less exposure to ultra-premium cognac, meaning its customer base is more sensitive to price hikes,” said Arnaud Autier, equity analyst at ODDO BHF.
Industry observers remain cautious, noting that even the adjusted framework still introduces pricing rigidity and potential compliance burdens.
Brussels-based trade group spiritsEUROPE called the decision “a significant barrier to legitimate trade,” and reiterated that European producers had provided evidence over the past 18 months to disprove dumping claims.
Trade tensions stretch beyond spirits
The brandy probe, while now partially resolved, was the first in a broader effort by China to target European goods amid escalating trade disputes.
China has also launched investigations into European pork and dairy products.
Meanwhile, French authorities say China’s focus on cognac was politically motivated, given France’s vocal support for EU tariffs on Chinese EVs.
Analysts believe the resolution on brandy signals a willingness from both sides to prevent a full-blown trade war.
“I think both sides, France and China, did not want this to get out of hand,” a senior French industry source told Reuters. “They wanted to find a resolution.”
Still, with final anti-dumping duties averaging 32.2% on non-compliant EU brandy and similar spirits, and little progress on the EV dispute itself, tensions remain high.
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