China has imposed new taxes on imports of European brandy, a move widely seen as retaliation for the European Union's recent decision to increase tariffs on Chinese electric vehicles. The European Commission has threatened to challenge China’s actions at the World Trade Organization (WTO), accusing the country of misusing trade defense measures.

The Chinese government announced the new restrictions shortly after EU member states approved harsher tariffs on Chinese-made electric vehicles. French brandy producers have expressed alarm over the tax, calling it "catastrophic" for the industry, particularly affecting major brands such as Hennessy and Rémy Martin. Shares in these companies dropped sharply following the announcement.

"The French authorities cannot abandon us and leave us alone to deal with Chinese retaliation that has nothing to do with us," said the French Cognac lobby group BNIC. The group demanded that the taxes be “suspended before it’s too late.”

China, however, defended the decision as an “anti-dumping” measure aimed at protecting domestic producers. The Ministry of Commerce claimed that European brandy imports could cause "substantial damage" to Chinese distillers and announced that importers would now be required to pay "security deposits" on European brandy shipments. Additionally, China hinted that it may impose tariffs on other EU imports, including cars, pork, and dairy products, according to the BBC.

In response, French Trade Minister Sophie Primas condemned China's tax on brandy, labeling it a “retaliatory measure.” She stated that the decision was “unacceptable” and a “total contradiction” of international trade rules. France is the leading exporter of brandy to China, accounting for 99% of the brandy sold in the country.