Overview

• China has launched a tit-for-tat trade probe into European luxury spirits producers, specifically targeting French brandy makers, in response to Europe's investigation into low-cost Chinese electric vehicle makers.
• China's investigation is seen as retaliation against the European Union's probe into Chinese EV manufacturers like BYD, which recently overtook Tesla in sales.
• France's cognac industry has responded to the allegations of price dumping, stating that the discounts given to Chinese buyers are not unusual and are fully compliant with Chinese and international regulations.
• China's probe into European brandy is seen as a strategic move as it is difficult for China to target Europe's car industry due to the majority of cars being built in China in joint ventures with local partners.
• The trade dispute between Europe and China has escalated over the past year, with both sides accusing each other of unfair competition and protectionism.