China is tying a tentative cognac minimum‐price deal to progress EU‐China electric vehicle tariff negotiations

China has reportedly tied a tentative minimum-price agreement on French cognac imports to progress in its ongoing dispute with the European Union over tariffs on Chinese-made electric vehicles (EVs).

Beijing’s move comes as a diplomatic deadline looms: China’s ongoing anti-dumping investigation into EU brandy, mainly cognac, must be resolved by July 5, or existing temporary duties as high as 39% could become permanent.

The proposed pricing floors range from 46 yuan ($6.39) per liter for VS-grade cognac to 613 yuan ($85) per liter for premium XXO, a far more favorable outcome than the costly tariffs currently in place.

Cognac makers brace as EV link gains traction

Under the terms, leading houses including Hennessy, Martell, and Rémy Martin expect slightly higher minimums than smaller producers, according to sources cited by Reuters.

The deal, outlined in June 12 briefing slides by lawyers for cognac industry body, Bureau National Interprofessionnel du Cognac (BNIC), leaves room for optimism provided EV negotiations advance.

Another French government insider confirmed that Beijing is tying the cognac resolution to progress in the EV dossier, though Paris has publicly denied any such tether.

The European Commission has imposed tariffs up to 45.3% on Chinese EVs, targeting manufacturers such as BYD, Geely, and SAIC on the grounds of unfair subsidies. Talks on replacing these levies with minimum import-price commitments are underway, though progress has been limited.

German automakers and Mercedes-Benz CEO Ola Källenius have urged negotiated settlements over full tariffs, advocating for price undertakings instead.

Trade tensions have spilled into various sectors. China recently extended an EU pork investigation as part of the same negotiation landscape. Meanwhile, Beijing and Brussels agreed in April to restart talks on minimum-price commitments for EVs.

An upcoming EU-China summit scheduled for July 24–25, coinciding with the 50th anniversary of diplomatic ties, is expected to prioritize trade issues, including both cognac pricing and EV duties.

Impact on industry players

The temporary duties have hit cognac exports to China hard, reducing shipments by as much as 70% and slashing the stock prices of Pernod Ricard and Rémy Cointreau by around a third.

Exporters who agree to the minimum-price scheme hope to avoid permanent tariffs, though uncertainty remains until China signs off and EV talks progress.

On the EV side, Chinese manufacturers face high tariffs and market distortion concerns. A shift toward minimum-price arrangements could benefit firms like BYD, Geely, and SAIC, and reshape EU auto market dynamics

Both sectors face critical junctures. Meanwhile, EV negotiations continue, with the EU and China exploring price undertakings instead of blanket tariffs.

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