China on Monday threatened to impose tariffs on pork imports from Europe, in what appeared to be retaliation for the European Union’s decision last week to impose preliminary tariffs on electric cars imported from China.
China’s Ministry of Commerce announced that it had opened an investigation into whether pork from the European Union was being dumped in China at unfairly low prices. The case could result in tariffs on dozens of products, from pork chops to pickled pig intestines.
The ministry said it was acting in response to an application from the China Animal Agriculture Association, a government-affiliated group, and released a copy of the request. The association accused the European pork industry of benefiting from inappropriate government subsidies as it suffered from overcapacity — the same accusations that European and American officials have leveled against China’s car industry.
The European Union had no immediate comment on the Chinese action. The European Union Chamber of Commerce in China, a business group, said in a statement that China’s action was not a surprise after the European Union’s recent electric vehicle tariffs. The chamber added that it “encourages both sides to take action to depoliticize the business environment and find ways to address the underlying causes.”
The E.V. tariffs have been a divisive issue in Europe. Labor unions and European auto parts producers have been worried about job losses as China’s electric car exports to the continent rise quickly. But European automakers like Volkswagen have been expanding electric car production in China and shifting their purchasing from Europe to low-cost Chinese suppliers. They have been wary that trade frictions may prompt China to target imports of luxury cars from Europe next.
By choosing pork imports as the apparent payback for the electric vehicle tariffs, China is turning to a playbook it followed during its last major trade fight with the European Union over a decade ago.
In 2013, the European Union moved to impose 11.8 percent tariffs on solar panels from China. China responded by threatening tariffs on wine from Europe and then launched a successful campaign to persuade national governments in Europe to force E.U. leaders in Brussels to back down.
Farmers are a potent political lobby in Europe who have been looking for ways to increase sales to China. Experts in China’s trade policy said Beijing might be hoping to pressure the European Union to back down again.
In addition to the pork trade case, the Ministry of Commerce already began in January a case against imports of Cognac and other European wine-based spirits that come mainly from France. The French government has been an early supporter of tariffs on electric cars from China, following allegations that China has heavily subsidized the industry.
It’s not clear China will succeed in stopping the European Union’s electric vehicle tariffs. Chinese imports of solar panels decimated Europe’s solar panel manufacturing industry after the union rescinded its tariffs. European governments are still looking for ways to revive the industry. Few in Europe want electric car production to suffer a similar fate.
China also has a huge overall trade surplus with Europe. In recent months, China has sent four shipping containers’ worth of exports to Europe for each container of imports that comes the other way.
For China’s part, tariffs on pork could help protect an important industry from international competition. Pork prices fell 14 percent last year, as the country’s pig farmers expanded their herds. Prices have begun to recover in the past month but are still half of what they were three to five years ago, when an epidemic of African swine fever killed much of China’s herd.
China is by far the world’s largest market for pork, a dietary staple. Average consumption per person in some provinces, like Hunan, reaches nearly a quarter-pound of pork a day.
China has yet to retaliate over the Biden administration’s decision in early May to raise American tariffs on electric cars, lithium batteries and other products from China. China has criticized the U.S. tariffs, but has refrained from the rapid escalation in retaliatory tariffs that it pursued during the Trump administration. That approach in 2018 and 2019 ended up backfiring for Beijing. The Trump administration quickly broadened its tariffs, many of which have stayed in place ever since.
Beijing imports fairly little from the United States after years of government-led efforts to reduce dependence on imports, so it has had limited options for broad retaliation.
Li You contributed research.