France’s cognac producers provisionally agreed to minimum import prices for the Chinese market, but Beijing will formally approve the arrangement only if the EU makes concessions in parallel negotiations over tariffs on Chinese electric vehicles (EVs), according to Reuters.
The explicit linkage, confirmed by both cognac industry representatives and EU trade officials, underscores China’s strategic leveraging of its luxury goods market to influence broader trade policy.
Under the tentative framework negotiated by the Bureau National Interprofessionnel du Cognac (BNIC), minimum import prices would be established across cognac categories VS (Very Superior), VSOP (Very Superior Old Pale), XO (Extra Old) and XXO (Extra Extra Old). Major houses like Hennessy, Martell, and Rémy Martin would face slightly higher minimums than smaller producers, though still below current market rates.
Producers formally committed to these terms, awaiting Beijing’s final endorsement. The agreement offers a critical escape valve for an industry reeling from China’s provisional anti-dumping duties of up to 39%, imposed since October 2024. Without a deal by the 5 July investigation deadline, these levies could become permanent.
Commercial fallout and industry pressure
The tariffs have already slashed monthly cognac exports to China by up to 70%, according to BNIC data, while shares in Rémy Cointreau and Pernod Ricard plummeted 35% and 33% respectively.
The disruption extends beyond border taxes: China has blocked all duty-free cognac sales since December 2024, eliminating a channel representing 20% of historic Chinese revenues. Florent Morillon, President of the BNIC, emphasised the “urgent need” to reopen this market even as price negotiations continue.
Beijing’s conditioning of the cognac deal on electric vehicle negotiations reveals a calculated strategy to fragment European unity. China demands the EU replace its tariffs on Chinese EVs with minimum price commitments mirroring the cognac model. This tactic emerged after France championed the EU’s anti-subsidy investigation into Chinese EVs, prompting Beijing’s retaliatory brandy probe.
Diplomatic activity also intensified ahead of critical deadlines. EU Trade Commissioner Maroš Šefčovič and Chinese Commerce Minister Wang Wentao held talks in Paris this month, while technical teams conducted three negotiation rounds in Beijing. French Trade Minister Laurent Saint-Martin cautiously noted talks were “on the right track” during a visit to Cognac, but warned:
France will not compromise on … the protection of its industries, such as cognac.
China’s cognac duties disrupted hospitality sectors across Southeast Asia, where supply chains funnel bottles to Chinese consumers. Similarly, the EU’s EV tariffs risk triggering Chinese export surges into developing markets. As European Commission President Ursula von der Leyen stated after talks with Chinese Premier Li Qiang, both powers share responsibility to prevent “global trade fragmentation” amid US tariff escalations.
