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China Spares Major French Cognac Brands from Heavy Tariffs
China exempts major French cognac brands like Hennessy & Remy Martin from 5-year tariffs—if they stick to minimum prices. Relief for €3B industry amid China-EU trade tensions.
ND
by News Desk
2025-07-04
China Spares Major French Cognac Brands from Heavy Tariffs

In a rare moment of relief amid escalating trade tensions between China and the European Union, Beijing announced that it will exempt several major French cognac producers from hefty anti-dumping tariffs—provided they adhere to minimum pricing requirements.

The Chinese Ministry of Commerce confirmed on Friday that while duties of up to 34.9% would be imposed on EU-originating brandy for the next five years, iconic producers such as Hennessy (LVMH), Remy Martin (Remy Cointreau), and Pernod Ricard will be spared if they comply with pricing conditions. The exact minimum prices remain undisclosed.

 

💥 Tariffs Amid EV Row

China launched the anti-dumping probe in January 2023, widely viewed as retaliation for the EU’s decision to slap tariffs on Chinese electric vehicles (EVs). The current ruling, while punishing most EU brandy producers, offers a lifeline to France’s top spirits exporters.

The move is also seen as a strategic balancing act ahead of a possible China-EU summit later this month, where trade—particularly over EVs and rare earth exports—is expected to dominate talks.

 

💬 Industry Reactions & Relief

Remy Cointreau called the outcome a “less punitive alternative” that would allow the company to maintain and grow its investments in China.
Pernod Ricard acknowledged operational cost increases but noted they would be far smaller than if the full tariffs were enforced.

Additionally, deposits paid since October 2024, when provisional duties were introduced, will now be refunded—easing the financial strain, especially for smaller producers.

 

📉 Cognac Sales Hit Hard

China is the largest cognac market by value, and the trade war has taken a toll. According to the Bureau National Interprofessionnel du Cognac (BNIC), exports to China fell by up to 70% monthly since the duties were first introduced.

Market response was mixed. Remy Cointreau’s shares rose 0.54%, while Pernod’s dipped 0.3% after an early slide. LVMH dropped 1.5%.
Analysts at Citi now expect earnings upgrades for both Remy and Pernod. Remy, which earns 70% of its revenue from cognac, is set to update its guidance on July 25.

 

🤝 Deal Still Fragile

While the tariff exemption is welcomed, industry insiders say the situation remains tenuous. The BNIC warned that even with minimum price commitments, conditions are still worse than before the anti-dumping probe.

A French industry source involved in the negotiations said both Paris and Beijing were keen to avoid escalation.
“This was a major bone of contention,” the source said. “Both sides wanted to find a resolution without letting this get out of hand.”

Still, European Commission spokesperson Olof Gill condemned the tariffs as “unfair and unjustified,” indicating the broader rift is far from resolved.

 

🧭 What’s Next?

China’s Foreign Minister Wang Yi is in Europe this week, seeking to smooth relations ahead of the summit. Whether this cognac compromise sets the tone for wider cooperation—especially on EVs—remains to be seen.

The BNIC reiterated its call for a political resolution, urging the French government and EU officials to work toward full tariff removal.

 
Tagged:

ChinaEU

CognacTariffs

LVMH

RemyCointreau
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