China announced it will impose tariffs of up to 42.7% on dairy imports from the European Union, marking a significant escalation in the simmering trade dispute between the two economic powers. The duties, set to take effect December 23, target products including fresh, processed, and blue cheeses, as well as certain types of milk and cream.

According to China's Ministry of Commerce, the tariffs are a response to an anti-subsidy investigation launched in August 2024, which concluded that EU subsidies had caused "substantial damage" to China's domestic dairy industry. The tariff rates will vary: companies that cooperated with the investigation face a 28.6% duty, while uncooperative firms will be subject to the maximum 42.7% rate.

The move represents a direct retaliation against Brussels. Tensions have been high since the EU imposed tariffs of up to 45% on Chinese electric vehicles in October 2023. In November, the bloc also challenged China's tariffs on EU brandy at the World Trade Organization, calling them "unjustified and unwarranted." An EU spokesperson reportedly echoed that sentiment regarding the new dairy tariffs on Monday.

The dairy duties follow a recent, contrasting move by Beijing. Just last week, China sharply reduced tariffs on EU pork imports, lowering rates to between 4.9% and 19.8% after imposing temporary anti-dumping tariffs as high as 62.4% in September. This pattern of targeted tariffs underscores a strategy of calibrated economic pressure, applying and relieving duties on different sectors as part of ongoing negotiations.

The escalation highlights the fragility of EU-China trade relations and raises the prospect of a broader tit-for-tat conflict, with significant implications for agricultural exporters and consumers in both regions.